Instead of enhancing workers’ lives, California fast food workers’ $20 minimum wage increase may hurt job growth and speed automation. It shows Democrats’ hatred for the free market again.
Increases in the minimum wage have been shown, time and again, to have the effect of lowering employment levels over the longer term. (Source: Work lawyers)
California’s Minimum Wage Increase Could Affect Job Growth
Governor Newsom signed the New Wage Law for minimum wage increase saying it would bring the state “one step closer to fairer wages, safer and healthier working conditions, and better training.” Yet research after study shows that a minimum wage increase impairs long-term employment. A meta-analysis released last year indicated that roughly 80% of studies since 1992 found negative employment outcomes, with stronger effects for teens, young adults, and less-educated workers. Fewer than 6% found minimum wage increases promoted employment.
The measure won’t provide Mr. Newsom’s other perks either. Businesses often reduce benefits, lay off low-skilled and inexperienced workers, and degrade workplace conditions to offset minimum wage hikes. Additionally, raising the minimum wage for fast food workers will raise prices at businesses that serve minorities and the poor. At McDonald’s, minimum wage rises are virtually entirely passed on to customers through higher costs.
While restaurants may compensate with higher prices and lower earnings in the short term, such restrictions discourage new enterprises and may force less competitive eateries out of business. Minimum wage increase predicted low-rated restaurant closures in San Francisco. This reduces jobs and consumer well-being. At the signing, bill author Chris Holden, a California Assembly member, stated, “We helped a father or mother feed their children, we helped a student put gas in their car, and helped a grandparent get their grandchild a birthday gift.”
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Minimum Wage Increase Accelerates the Business to Automation
But forcing the free market wouldn’t benefit parents, pupils, or grandparents. The law will accelerate the industry’s automation, costing many jobs. A National Restaurant Association poll in early August indicated that 65% of restaurant operators lacked enough staff to fulfill consumer demand. Fast food restaurants are automating to satisfy their needs. Coffee machines faster than baristas are being installed in 10% of Starbucks facilities, according to Reuters.
Chipotle is testing a grill that cooks 70% faster than employees. Dominoes is creating an automated pizza maker. The National Restaurant Association said that 58% of restaurant operators nationwide stated technology will be used more to overcome labor shortages this year. The latest Democratic attempt to outwit free-market economics is California’s fast-food wage rise. Progressive economic policies repeatedly use laws to raise wages or lower living costs without considering the unexpected implications of government planning.
Last month, Chicago Mayor Brandon Johnson announced plans for a city-owned grocery store to promote “food equity” in impoverished neighborhoods, but it does nothing to address the crime and taxation that are driving stores out. Reason noted that St. Paul’s severe rent regulations that limit hikes to 3% per year cut construction permit applications by 84%.
History suggests the new California law will lower salaries and employment. According to the Cato Institute, state minimum wage increases have little effect on minimum wage laborers’ wages. The wage increase is driven more by employee experience and skills than the economy. California’s policies are one reason hundreds of thousands of people are moving from blue to Republican states with more economic freedom and cheaper living costs. The Wall Street Journal claimed that Sun Belt regions lured laborers with higher wage increases and new employment in numerous industries, while California and New York inhibited expansion with high taxes and regulations. Progressives believe their policies can outperform the free market in allocating goods, services, and labor. Democrats will keep passing laws like California’s that don’t serve their populace until they realize their failed government-planned economics.
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