FRED (the Federal Reserve Bank of St. Louis), has useful data.
First, all food/beverage hospitality workers in California.[1] Huge COVID transient, followed by recovery to almost the pre-COVID level. But no further increases.
Full-service restaurants had a similar transient, but never came back to pre-COVID levels. Employment peaked in mid-2023, and has declined since. Full-service restaurants didn't get the $20 fast food minimum wage. But workers there may have tip income.
California does not have a lower "tipped minimum wage", and all tips go to workers.
What FRED calls "limited service restaurants and other eating places" shows about the same curve as full-service restaurants.[3] This includes both the fast food chains and the fast-casual restaurants. If you have to order at a counter, it's "limited service", even if they bring out the food later.
So, the part of the restaurant industry that wasn't affected by the increase shows about the same trend as the part that was. Basically, post-COVID, onsite eating never fully came back. Food delivery became a much bigger part of the industry.)
Those stats are regardless of business size. California's minimum wage law for "fast food" applies only to businesses with at least 60 locations. But it also includes such
things as 7-11 stores that sell hot dogs and pizzas heated up on site. So, not an exact match to the FRED categories.
Overall, the COVID transient and its aftermath is bigger than all other visible effects.
It's still a net loss of jobs. I'm certain the future will involve increasing automation to further reduce headcount. A McDonald's recently opened near me with no seating, and orders can only be placed through the app or at the drive thru. I spoke with the owner who mentioned two main reasons for this setup: first, ongoing issues with the local homeless population and second, a desire to minimize staffing. Fewer employees are needed when there's no dining area to clean or counter to staff. I’m pretty sure this is the direction things are headed in California.
I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area. (We actually have a fairly robust program that provides housing for folks in need). We have one fast food restaurant in the area and it's a McDonalds. It was one of the main hangouts for folks in the area. We would have weekly meetups there. After Covid, they closed the seating area and installed the touch screens. They went from employing around 7 to 9 folks down to only 3 and talking with the franchise owner, they're not planning to ever hire back up and re-open seating. He did mention that the gross revenue is way down, but net revenue is about the same and his stress in managing the location is way reduced with the headcount reduction and simplification of the business.
People like to think that employment is pretty much the only good that does not result in a mismatch of supply and demand from a price floor.
Take for instance a proposal that says "no one is allowed to sell their used car for less than $10k". Maybe the justification is poor people are desperate and sell their car too cheap and all these dealerships and buyers are a monopsony underbidding the real value of the car, profiting off these uninformed, unorganized individual sellers.
Does anyone think this is a good idea? Would anyone bother reading studies contemplating the effect this may have?
No, of course not. Everyone knows that this would essentially mean many cars that would have sold under $10k would just not get sold. Sure some people would benefit, maybe getting a higher price for their car. Some things would shift, maybe people would opt for scooters or e-bikes or something.
But I wouldn't want this price floor if I was on either side, trying to offload a bad car or buying one.
The cost of employment is not comparable to the cost of a particular good. Employment has much more complicated implications on the economy and on society. A minimum wage is set in part to prevent a desperate race to the bottom, and to (try to) ensure something approaching a living wage. It’s a blunt and often ineffective tool, but viable alternatives are scant. The free market won’t solve this one any more than it solves the problem of healthcare.
Minimum wages are an economically imperfect (as you've pointed out) but politically possible way to put some downward pressure on much, much bigger failures of our species and society to have attitudes and policies around acceptable minimums for basic human needs that are even logically self consistent, to say nothing of enlightened.
We can't quite get it together on saying "food, shelter, healthcare are human rights" or it's sinister sibling "we'll let you die in the cold if there's no profit to be had from you".
Those are both consistent, actionable policies, but no one wants a consistent policy on this because everyone gerrymanders it dofferently.
So we get clunky hacks like minimum wage that are sort of the average of Aspirational Star Trek and Aspirational Blade Runner.
It's an interesting point, but it's the closest thing to guaranteeing a minimum return on a person's work and preventing downright slavery that we have.
That's the direction every company is headed everywhere. It's far more prominent in locales with very high labor costs, but once those technologies are easily scalable they will roll out everywhere, even places with cheap labor.
There used to be many grocery and liquor stores that you handed in a list of what you wanted at the counter and the staff collected it for you from behind the counter. With the way stores are locking up items it seems like we're steadily returning to that era.
No, you don’t understand. If the government hadn’t been involved, private organizations would have kept employees around even when cheaper alternatives exist.
This is sarcastic of course. Ideally if our economy distributed rewards across all of society everyone would be for changes like this if they did actually speed up automation
Its not at all imo. Franchised businesses are not in the habit of employing low skill workers as a public service. This data is interacting with both covid effects and infrastructure upgrade/rollover - in other words, it takes a while for companies to adopt affordable touch screen ordering systems and its been phased in at a ton of non-fast food (at least in my area) over the same period of time. Local health grocery store has touch screen ordering at their deli, as well as simultaneously going cashless. Most coffee shops too. Look at most international airports - almost all the kiosks have one or no attendants now.
The causality is raising the minimum wage pushed business to do this sooner rather than later. this is why, as per the study, California lost more jobs than states that didn’t raise the minimum wage
I have always preferred to sit in my car to eat at a park or some relatively peaceful place in the shade without too much activity. Sitting in a big dirty room with a bunch of people watching me eat has never been comfortable.
> “meeting other people in person” as a tiresome chore.
Someone linked the short story The Machine Stops by E. M. Forster the other day where this is an element. A character makes a big deal of having to meet her son in person, opposed of through the machine.
Written in the 20s, gets a lot of things uncannily correct for a society 100 years later. Video calling, silence/do not disturb mode, notifications, air conditioning, people no longer wanting to look at real things with their eyes, etc.
Pre-COVID, I used to go to a small kabob restaurant in Silicon Valley. During COVID, I'd order from them via Doordash. The food wasn't as good cold, though, even if re-heated. After COVID, I started going back in person. Often, I'd be the only in-person customer, despite a steady stream of deliver drivers going in and out. Now, they're out of business.
>Pre-COVID, I used to go to a small kabob restaurant in Silicon Valley. During COVID, I'd order from them via Doordash. The food wasn't as good cold, though, even if re-heated. After COVID, I started going back in person. Often, I'd be the only in-person customer, despite a steady stream of deliver drivers going in and out. Now, they're out of business.
Because DoorDash/GrubHub/UberEats/etc. charge the restaurants more than their gross margins. In such an anvironment, unless a restaurant raises prices 25-30%, they're eventually going out of business.
I'd say that these companies are most certainly not providing 25-30% value add. Rather, it's just leeching off restaurants and their customers.
It's disgusting and has killed many, many restaurants where I live (NYC), even though we already had a culture of delivery before these parasites came along.
The owner isn't neglecting it, it's a tragedy of the commons.
If the owner was to overhire, it might reduce the homeless population a little, but at great cost. And other businesses nearby will benefit for free.
Only large coordination at the level of state or national government can afford to implement welfare as a real investment in their citizens. If you do it at the city, county, or corporate level, it's just charity.
We need to detach from the "jobs at any cost" mentality behind your first sentence.
By that logic ending child labor is "still a net loss of jobs."
I mean, here you are talking about a business owner having issues with the local homeless population who are homeless because their jobs don't pay enough to afford housing.
All these business owners race to the bottom paying their employees scraps and then wonder why they have empty dining rooms with no customers to afford their products sold at record-high profit margins.
Obviously, minimum wage doesn't really fix the economy on its own, but it is a very important tool in a toolbox for ensuring that capitalism is restrained from following its worst instincts.
This is in stark contrast to the Berkeley Institute for Research on Labor and Employment study that claimed the law had no negative effects on fast-food employment.
The Berkeley study has been cited quite heavily by policy makers.
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
They did a study of Seattle’s minimum wage that did not hold up well in subsequent studies, in part because their assumptions about how adverse effects would manifest were poor. They seem to have memory-holed that. Seattle’s minimum wage is higher and more broad based than California.
Regardless, with the passing of time the adverse effects have worsened to the point that even proponents in Seattle acknowledge there are serious issues that have resulted which need to be addressed.
California looks like it is trying to speedrun Seattle’s mistakes.
The Berkeley report doesn’t count number of jobs. It looks at pay and number of restaurants operating (both went up).
It could be that part time positions decreased but full time positions increased, along with hours per job position / total hours / hourly pay and restaurants operated. That’d be a good thing for everyone involved (except maybe the cardiovascular health of the customers), and is compatible with both studies’ conclusions.
Small decrease in employment in exchange for ~25% higher wages for those employed? Did I get that right? Obviously every single row in the dataset is a unique human, but overall sounds like a big success?
It depends upon how you define "success." I visit California regularly, and since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices. So now my normal breakfast spot isn't open when I want to go there, so I eat at home. The places I visit when they are open are mostly empty, because the customers don't want to wait longer and/or pay higher prices.
So aside from the fewer employees getting a raise, the businesses are now under financial stress because of the reduced revenue, the customers have fewer options for where to eat, and the State of California and the local city/county governments will receive less tax revenue from these restaurants.
Like most of the other recent California legislation, it's a "success" at further damaging the local economy and encouraging people like myself to stay away.
Is your usual breakfast spot a location with more than 60 locations? The minimum wage increase here only applied to chains with more than 60 locations.
A lot of what you're describing is nation-wide. Food is more expensive everywhere. Cost of living in California is up significantly. Rents for restaurants is significantly higher as well (at least anecdotally, my wife's family restaurant has to close because they doubled the rent after their lease was up, I have heard this is incredible common).
This study by UC Berkeley attributed a 3.7% increase in food price because of the minimum wage changes. It's quite likely that food overall getting more expensive is responsible for a lot of what you're seeing.
If we can't afford to pay people in California a wage where they can live here, then maybe the economy overall isn't sustainable? A $20 minimum wage is like $2800 take home per month and in many places that can barely cover rent.
My usual breakfast place, only on the days that I ride my bike along the beach, is a Subway. They previously opened at 6:30am, but now they open at 8:30am.
Depending upon the time of year and when the sun rises, I begin at different times, but usually around 6-7 am. I'm usually done before 8am, and the Subway was a convenient place to stop on the way home.
I don't cook much when I'm in California, and there are still some good restaurants near me there. Those prices have risen too, but it's high-end food, so I don't mind as much. There's a Carl's Jr. about half a mile away, and it's been closed for 4-5 months. It's in a prime location (on PCH), but nobody has moved in yet.
There's already a federal minimum wage, and a state minimum wage, but now there's a restaurant minimum wage too, and it was passed in California without any input from the food industry, or any concern for the impacts it would have on them.
Most of the workers in those places are students (high school or college), and they're not yet out on their own. They took the job knowing that they wouldn't be earning a living wage, and yet they still wanted the work. To me, it doesn't seem very fair to the employers when the government steps and tries to "solve" a problem, causing a major disruption to their industry. This is the same sort of behavior the Soviet and Chinese politburos demonstrated during the peak of communism in those places, and the unintended consequences almost always made things worse.
Is your normal breakfast spot a fast food joint? If it is not, it is my understanding that is not affected by the "higher minimum wages for fast food workers" regulation.
If it is a fast food joint... well, I can't speak for all of California, but the fast food places in the section of San Francisco that I live (and roam around) in seem to have a reasonably healthy amount of customers in them.
Perhaps things are different where you are, but I've noticed food getting markedly more expensive, have heard of commercial rents getting higher and higher, and have heard that many of the folks who would have done waitstaff jobs have decided to fuck off for places that were (at the time, if not now) less expensive than California. Oh, and there was the whole "flight from the expensive cities because WFH means that many folks don't have to tie themselves to an expensive, small apartment in a city they don't really like" thing a while back that gutted the downtowns (and leisure districts) of some-to-many big cities because -like- many folks exercised their new option to leave and left.
Were it me, I'd consider blaming factors like those before I blamed modest increases in wages.
I’d point to savings-driven relocation as well. It’s why some suburban towns have seen an increase in number of restaurants even as options in cities decline.
If the desire is to reverse that trend, the best way to move the needle is to bring housing prices (by far the largest living expense) in cities back down to earth so they’re affordable to normal people again, however that’s best done (probably building more housing, unlike SF which decided to instead prioritize offices and retail, leaving it vulnerable when the pandemic hit).
You need to factor rent increases into your thinking, both commercial and residential. Your breakfast spot is a business that no longer makes financial sense to operate.
Feed the location of a business into a trip planner and note every neighborhood within reasonable commute radius. Calculate the average cost of renting a room in these areas and then multiply by three. That's your de facto minimum wage because you have no applicant pool beneath it.
Adding on to this, your competitors in a better financial position are all paying well above minimum. There's probably a McDonalds across the street starting people at five bucks an hour more than you, and they have that wage plastered on a banner right out front.
People with better fitness for employment had their situation improved. People with less fitness for employment may be more likely to be harmed.
That’s a big success for the former group for sure. Whether that’s a policy success is slightly hazier than you presented I think, without other interventions to support those who are more likely to be harmed by the reduction in employment.
If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.
I agree that a lost job should carry some kind of premium compared to a total increase in wages paid, and you also have to go and look at the total hours worked to get a good picture, but if the total relative increase in remuneration was higher than about 10% or so I think that's probably enough to be able to hand wave the employment decrease.
If it only turns out to be 5% I'd be a bit iffier about it.
In the UK we have a pretty generous minimum wage (for over 21s), I think even relative to $20 in California, and the effect on employment has been very small while minimum wage jobs now give a pretty OK life, so I'm inclined to support high minimum wages generally.
> If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.
That seems unlikely to be just that though, this study was just on the people who lost jobs. If 20,000 people are out of a job, there is probably another larger cohort on less hours. And we also don't know how much wages rose. The people who were fired were the ones who could only justify being paid the minimum. The ones who stayed might already have been paid more like $17, $18 or $19/hr.
So yes to what you say, but the study doesn't say anything about whether total compensation went up or down.
Also low minimum wages are actually just corporate welfare.
The gap between what a minimum wage job pays and what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die, which means the jobs don't get done, so that means the resource spent by governments or charities as a result of a low minimum wage is a subsidy for the employer. Instead of paying what it costs they get it for cheaper to create a fiction of "employment".
This right here. We should demand not to subsidize the richest companies in the world. The Walmart family can afford to pay their employees a living wage. Instead you and I pay for that in taxes, while they extract billions in profit and value from their business.
If anything we should be subsidizing small businesses to give a more level playing field against companies with global economies of scale.
> We should demand not to subsidize the richest companies in the world.
Not without overturning Dodge Bros vs Ford, I believe. The ruling created shareholder primacy, the privilege of shareholders to have maximum bites of the corporate apple. It rigidly protects shareholder (and by ext, executive) interests.
The never-ending wealth that flows from that - first buys politicians, then officials, judges and (eventually) every part of regulation & corporate oversight.
> what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die
I take this to mean the assistance covers the gap to prevent death.
I would amend that to note the following: We can exist in a state of profound poverty w/o assistance for a very long time without dying. Persistent Hunger and crisis-level stress kills very indirectly; it commonly takes decades.
source: me + 5 kids. a decade of hunger-level poverty in a red state.
This isn't so straightforward. I would argue that they have some effect on the customers as well.
In the US, fast food restaurants are remarkably cheap, which is probably caused by low wages as well. If the workers were paid Danish or Swiss wages, quite a non-trivial part of the US population would be no longer able to afford a visit.
Now there is a wider question if that wouldn't actually improve their health, but that is already a bridge too far from the conversation. Miserly wages of restaurant workers do make the restaurants themselves more affordable to the general public, and the customers seem to be content about it.
But that was the best job they could find. Presumably those people are going to be unemployed now. I mean, maybe they're kids and their families will have enough slack to just adsorb the change but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr. So it actually costs the broader economy more than the salary they lost - firstly the work they were doing isn't being done, secondly someone else now has to work to earn the keep of the person who was just laid off because the job that paid them around what their skills were worth just got regulated out of existence.
You'd probably have to know more about what the jobs were. Certainly there's more self-service and fewer people waiting around to help customers in large stores than there were at one time. And small-time retail has also fairly visibly declined in favor of big-box and online purchases.
The abstract states that there are 2.7% less fast food jobs, not 2.7% less jobs. There might be 2.7% less fast food restaurants as a result of this change, but in their place will be other businesses that employ people of higher than minimum wage. Those businesses might hire the best fast food workers while the average fast food worker continues to be employed doing fast food. As a result, there may be no people who have now become unemployed as a result of this change, and only increases in wages. The data is inconclusive.
Regardless, instead of arguing over which commercial property takes which spot and trying to engineer the perfect fit with the limitations we are dealing with, we should be increasing the amount of places that are zoned for commerce. This will bring increased demand for labor, which will increase wages.
If one of these fast food places shuts down, it's not like the lot is just going to sit vacant forever.
The primary effect of these types of laws is that businesses that employ fast food workers are less profitable, and thus when they compete against other businesses for a given lot, will bid less for the land. If the marginal buyer changes, it would have to do so to a business that relies less on minimum wage fast food workers.
That isn’t what’s happening. A lot of these areas are permanently hollowing out far beyond fast food, at least with respect to local businesses. Lots of places in decent neighborhoods are boarded up and stay that way. This is an issue even in some cities with strong population growth.
I recently had the mayor of a major west coast city tell me this was a permanent trend, that there was no way to reverse the loss of these small businesses and that the disposition of all that real estate was a major issue, compounded by a loss of basic neighborhood services like groceries that used to operate out of this real estate.
The future isn’t other businesses that somehow magically pay higher wages. The future city planners are seeing is all delivery all the time from warehouse districts, and ghost towns of commercial real estate for which there is no purpose. Even city centers are starting to turn into suburbs in terms of occupancy density.
> but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr
Are you implying that there are people in the world who just can't do anything productive enough to be worth $20/hour? That they are so useless that this was the only thing worth doing with them?
That seems fucking insane. If that's true, we have a huge problem with misallocation of value.
I think it's self-evidently true that there is a not ignorable group of people who can't create enough value to be worth being paid $20/hr (plus the employer-paid overheads) and have that be something that an employer would voluntarily do.
Around 10% of the population does not score highly enough on the ASVAB (an aptitude test for the military) to qualify for military service. The military, like any large employer, has an awful lot of jobs that require minimal skills and aptitude and for 10% to be Category V [unqualified for military service] based on aptitude, I would expect they wouldn't be the employees to create $20+/hr in value for private sector or other government employers either.
There are a significant number of people with developmental conditions such as Fetal Alcohol Syndrome or Down's Syndrome who, realistically, are never going to be capable of generating $20/hr of economic value. The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.
> Small decrease in employment in exchange for ~25% higher wages for those employed?
It's a 25% higher minimum. It doesn't mean everyone was making the minimum before the law. Certainly not all were. (It would be interesting to know actually how much the wages went up on average.)
Also, do we know if prices went up? Because that could have a negative effect on the rest of the local population.
It's too soon to say. Increasing the cost of labor will reduce jobs in the short term, and increase the cost of fast food. In the medium term, that may lead to people cutting back on fast food, which then leads to more job loss.
If fast food companies have perfect knowledge of their market, then the immediate job loss would be all that happens, but they don't so it will take some time to adapt to the new market, and see if consumers will bear the increase in cost.
That's not even considering substitutes for labor, which have never been as competitive as they are now. AI, robotics, single-purpose machines, etc. One negative to a minimum wage is that we don't actually know the market price of labor. When there is a shift from humans to machines for labor, it will happen quickly and without warning, rather than slowly as humans become dissatisfied with decreasing wages.
Also, you only really need to cover any increased taxes, everything else you pay them is someone else's income (fast food workers probably spend almost all their income). So your getting a big income increase to people very likely to spend it, this creating more employment.
Maybe here this will be offset by decreases in welfare program usage and the very, very high effective marginal tax rates that creates.
Indeed, the positive for increasing minimum wages is that it makes robotics and automation more cost effective.
With Silicon Valley being in California, one might think this is done on purpose—favoring the automation sector over the wage holders.
Once these companies get some scale in California, they can then drive prices lower to be competitive in other states.
In the end, sacrificing minimum wage workers in California will lead to (generally California based) automation companies taking this revenue across the country.
It does really disfavor low productivity industries.
Actually, a core part of Sweden's original plan for social democracy was to have "solidaristic wage policy" where high wage workers would accept a lower wage in exchange for a higher one for low wage workers. The idea was you'd both squeeze low productivity businesses out _and_ provide a windfall to high productivity ones, who could expand faster.
Labor reduction in fast food doesn't necessarily look like 'automation'
It's things like self-ordering, machines that make change (if cash handling still matters), conveyor ovens/charbroilers, more centralized food prep, self-service and automated beverage dispensing.
Plenty of automation is happening outside of California though. Here's an Illinois bases company's blurb about beverage automation [1].
Reducing labor in small amounts increases service capacity, and in large enough capacity lets you operate a restaurant with a smaller minimum crew.
Robots will always be cheaper, it is not a matter of if they will come, it is a matter of when. That is no reason the state should subsidise workers for big corporations by allowing them to pay such low income that workers are often eligible for social security.
First, 2.3 to 3.9% decrease in fast food employment in a year isn't really small given only a fraction were affected by increase.
Second, the effective wage increase for fast food employment was actually quite a bit lower than 25% since several large municipalities had higher minimum wages and not all fast food restaurants were affected.
If the total salary has gone up, for less work done, it is a positive change. You can solve the inequal distribution via taxes and benefits.
Start: 100 people paid $100
After minimum wage change: 90 people paid $125, 10 people paid $0
After tax increase: 90 people paid $113 + $12 taxes, 10 people paid $108 from taxes
Now everyone is paid at least as much as they were before, and fewer people are forced to perform labour
In practice it was only 3% unemployment not 10%, which means the tax increase is less and there is more of an incentive to continue working. You can also pay the displaced workers less than their original wage, to reach an equilibrium where everyone is happy with either work+more money, or leisure+less money. Or have it be age-based with an earlier retirement. Or have people work part-time.
We need to stop seeing having a job as being inherently good. Being able to live is good. Humanity should strive for 100% unemployment.
"Less work done" doesn't look like a positive change, you can't tax your way out of a smaller pie. Specially if you strive for humanity to produce no pie to start with.
Well, on the other hand, it can be seen as something like a eugenic program to cleanse society of those unworthy of the state. After all, there is nothing stopping them from going to work somewhere else where there is no such minimum wage.
People dont think holistically about the economy. They think there are jobs. When they go there are that fewer jobs. Immigrants come in a steal jobs. Etc.
But in an economy, each richer consumer creates more jobs. The McD employees now buy better food, creating work for that supply chain. Or they can pay for education. Or they buy a takeaway coffee more often.
The immigrants who come and do jobs work hard for lower pay them spend that money into the economy.
They will decrease on their own if people think about where to get food, and not about extra money for the lottery.
> and maximum stock investments as well?
No, there are no restrictions. Any amount of investment. But there are only government's stocks and the terms of return on investment are determined by the government
> Will I still be allowed to hunt for food?
Only deep in the sparsely populated provinces. To avoid armed rebellions.
> Society is something better encouraged than gamified.
You'll be surprised at what methods encourage people best.
Read the biography of Korolev, who sent the first satellite and the first man into space. A case was fabricated against him, he was sentenced to 10 years in a gulag, but after a year he was transferred to a prison for engineers, on the condition that he will be a very effective engineer.
And he was. The results of such encouragement were amazing and almost unachievable by any other methods.
This has been tried, and actually does work reasonably well.
Well, not maximum wages as policy but policies where high productivity workers take a lower wage than they could individually bargain for in exchange for boosting wages of low productivity workers.
It provides a windfall to the most productive industries and a squeeze to the least productive ones.
Nah, they didn't lose them, they got employed elsewhere for what they are worth, so if we do random calculations, it was probably something like 25% increase for many of them.
The unemployment statistics were not influenced by raising the minimum wage here, so you can assume that the people who lost their low paid jobs simply moved elsewhere and got better paid jobs. It's mostly the employers' loss, which is how it should be. If you can't afford to start a business, don't start a business.
Yes. The paper doesn't go into detail about the wider economic effects in the state in business growth, tax revenue, and less reliance on public assistance.
Sounds like a net increase then in the money put into the California economy. Perhaps that has helped other sectors as well — like retail seeing more money spent in their stores as a result.
And the "decrease in employment" could very well be attributed to other factors, like inflated prices and shallow pockets of consumers, translated to them skipping on fast food more often...
Some things often overlooked in minimum wage discussions:
- Wages often go over or close to the minimum anyway, due to market forces, and do so without costly bureaucracy/enforcement/taxation/distortion
- Minimum wages make everyone whose marginal value is less than the minimum wage unemployable (since you would choose not to hire someone for $20/hour if their marginal value is $15). This is disastrous for someone who'd love to work at $x/hour, but who lives in a state which legislates a minimum wage > $x/hour, since they go from being employed at a low wage to unemployed.
> Wages often go over or close to the minimum anyway, due to market forces, and do so without costly bureaucracy/enforcement/taxation/distortion
By "minimum", do you mean "statutory minimum"? I'm not sure what the policy implication of this argument would be otherwise – an argument against wage and hour enforcement?
These 18,000 are most likely employed somewhere else at 20-25% wage increase. Note that a different study didn't see a rise in unemployment: https://www.nbcbayarea.com/investigations/california-minimum... which means that these people affected actually got a better living standard.
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
> California’s job expansion has continued into its 51st month, with Governor Gavin Newsom announcing that the state created 21,100 new jobs in July. Fast food jobs also continued to rise, exceeding 750,000 jobs for the first time in California history.
> “Our steady, consistent job growth in recent months highlights the strength of California’s economy – still the 5th largest in the entire world. Just this year, the state has created 126,500 jobs – solid growth by any measure.”
This is slightly out of date; California is now the world’s fourth largest economy as of April 2025, passing Japan. I assert the data shows the state does not have a job creation issue.
> Wages often go over or close to the minimum anyway, due to market forces, and do so without costly bureaucracy/enforcement/taxation/distortion
Yes, when there is an shortage or competitive number of low wage workers, not when unemployment rate is approaching 5% overall and close to 20% for low income earning bracket in most places.
That's the virtue of the pricing system! The invisible hand means if wages are low in particular profession, it encourages looking elsewhere, particularly in professions in short supply, whose wages will be high.
Yeah, nah, the idea that the problem with low income workers is that they're not pulling themselves by their shoestrings properly is well and thoroughly debunked.
People don't work in low income jobs because it is the easiest option, but because it is the only option often.
For fast food, the marginal value of an hour of work is a measure of how much a business can make from labor and the position, not some innate quality of the person. It’s flipping burgers not rocket science.
The study is sound, pretty small impact considering the increase in living conditions. What surprises me is people arguing that somehow a business is more important than livable wages. Americans and slavery really is a love story
3.2% decline in a year is massive because a year is way too short a time to see anywhere near the full effect due to things like leases often being for 10 years, technology rollouts being slow, etc. On a 10 year timeline i would expect tjat number to be much higher. Its a value judgement whether the wage was a good idea or not but it does us no good lying to ourselves about what that judgement actually cost
If your goal is to make sure anyone who wants a livable wage can get one, you can’t just decide you don’t care about the things that produce them. There’s a number of areas in California that already suffer from a lack of businesses; you may be more familiar with this phenomenon by the labor-focused name we usually use for it, “high unemployment”.
Really clever. Bet you'd love it being a coal miner in the Gilded Age. "Hum, no, livable wages are literally communism, you wouldn't want to kill millions, would you? I'm really smart."
You're exactly what I was talking about. Indoctrinated into being absolutely opposed to anything in favor of workers, spontaneously regurgitating those same few tired "arguments".
The poorest people are not the ones working minimum wage full-time. However, the poorest do want to purchase take-out. Increasing the minimum for fast food realistically helps a pretty minute demographic of workers, but the carry-over cost to consumers means that poor people can afford less fast food.
Maybe that's not such a bad thing, but if it's meant to help the poor (who either earn nothing or earn much less consistently) it's pretty ineffectual at it, particularly when accounting for differences in cost-of-living, and the types who typically work minimum wage fast food in particular. Walk into a McDonalds and you'll mostly see students and immigrants, that's not "the poor". "Livable" needn't arbitrarily mean a spacious 1-bedroom apartment either, which is why migrants paid below-market wages don't worry about rent.
Cash transfers and other schemes are better. We already do that to a small extent and could just expand it.
Edit: should clarify, it's a balancing act because a higher main wage on net can be beneficial, but after a certain level will lead to undesirable effects
Amazing how they are all universally experts in economic analysis of minimum wage. This thread is a goldmine. If only they educated themselves in collective bargaining next.
As always, the world is quite messy and one study doesn't really tell us very much. Maybe the Californian fast food sector is just having a tough time for unrelated and coincidental reasons.
However, the theory always said that a minimum wage rise reduces the number of jobs so it is a strong chance that around 20,000 people were put out of work by this policy.
The theory was raising the minimum wage wasn’t important because it’s mainly just kids who work after school jobs for minimum wage, right?
I’d like to see if there’s an increase in GPAs thanks to greater time for studying, or greater fitness from having more time to play a sport and lesser proximity to french fries.
> White women and Black or African American women have the highest rate of earnings at or below federal minimum wage, at 1.5% and 1.4% of hourly workers, respectively. Among all groups reported, Asian men have the lowest share at 0.5%.
>2.3% of hourly workers ages 16 to 24 earn $7.25 an hour or less, 1.2% of hourly workers ages 25 to 34 earn the minimum wage. Less than 1% of hourly workers older than 35 years old earn the minimum wage.
> However, the theory always said that a minimum wage rise reduces the number of jobs so it is a strong chance that around 20,000 people were put out of work by this policy.
20,000 people were put out of jobs by employers who didn't want to pay them what they are worth and instead wanted to exploit them. If you can't afford to pay livable wages to your workers, your business shouldn't exist.
Aside from really terrible home experiences for a tiny minority, a part time job for a 15 year old doesn’t need a “livable wage”
We don’t need kids working in coal mines but we also don’t need to make it near impossible for them to get work experience at a part time job because their skill level doesn’t align with $20/hr.
A 15 year old DOES need a living wage. How else are they going to save for post-secondary education? Is keeping them out of post-secondary preferable to you? Maybe your parents paid for yours, but not everyone has that.
Seems like if McD needs this sort of labour its a weird business model. It can only deliver by paying people supported by their parents who are doing the work for pocket money or experience. And can only work outside of school hours and will need to quit in a year or two.
Now if they pay the teenager half the wage the same adult is doing then someone is getting a raw deal.
solution : youth wage, below the standard minimum for the first year of work but that's not good enough for people who decided to close business because they cannot exploit anymore.
This creates an incentive to hire lots of young people and not hire unskilled older people.
In the UK which has a youth wage, has had negative productivity growth, and has had a series of extremely unpopular governments who needed to use minimum wage growth to support their growth, you have seen large employers mix towards younger staff (where that is possible, in other cases you have seen employers use government programs to import below minimum wage migrants) and let go older staff en masse (employers in the UK also have auto-enroll into pensions, but only over 22).
It simply isn't possible, particularly in economies that have structural problems, for productivity growth to just appear magically when politicians request it.
This is a classic problem with economic intervention: you intervene, change incentives, agents do something unexpected, and the result is more intervention, more distortion, on and on. Politically, this is gold because politicians look like they are doing something. No-one asks whether that thing needs to be done at all.
California is home to the largest number of illegal immigrants being exploited for cheap farm labor. If CA really cared about exploited people, they would have done something about that. And by done something, I don’t mean encouraging and protecting its continuation.
> Aside from really terrible home experiences for a tiny minority, a part time job for a 15 year old doesn’t need a “livable wage”
Said who? The same people who don't pay internships.
> but we also don’t need to make it near impossible for them to get work experience at a part time job because their skill level doesn’t align with $20/hr.
When minimum wage goes up, other more skilled labor also goes up, and adults will go somewhere better paid. Then the business will have no choice but hire the kids at the $20/hr and they will get that work experience you so want to bestow upon them. It's funny you are trying to twist it like it's gonna be a problem to find work experience for the poor poor kids, while all we know the business care about is how to exploit people at the lowest possible pay.
It's always "think of the children" with a specific crowd, an unhealthy obsession with children, I'd say.
Think of the children and ban XYZ books cause poor children can't comprehend what they are reading (allows us to ban books we don't like)
Think of the children and introduce chat control so we can track everybody and monetize their data (allows us to exploit everybody)
Think of the children and don't raise the minimum wage cause poor children can't find internships and part time jobs (allows us to exploit everybody)
There is a pattern here, not sure if you are ready to acknowledge it.
"Though in the same month, the U.S. Bureau of Labor Statistics showed California had approximately 750,000 fast food jobs, roughly 11,000 more than when the higher minimum wage law took effect"
"The Center on Wage and Employment Dynamics at UC Berkeley compared Glassdoor job posts and online food menu prices two weeks before the minimum wage raise and 2 weeks after. It found that wages increased by 18%, employment numbers remained stable and menu prices increased by only 3 to 7%, or 15 cents on a $4 burger."
Employment numbers remained stable, which is great, meaning the 18k people now are employed at other places at at least 20-25% wage increase. I will repeat it again: If a business can't afford to pay its workers, the business shouldn't exist.
Didn’t want to often can mean cannot. Many of those businesses would go bankrupt. Also some people who may have started a business will now forgo that possibility.
Now, for many that’s okay. People just have to be okay that that happens.
If a business can't provide a living wage, then whoever is running it is bad at doing so or chose the wrong business model. They should close. Why do you want poor business operators to remain in business?
There are many self-employed people in the third world who do not earn "living wages" what do you propose they do?
Never was minimum wage equivalent to a living wage. A living wage is an ill-defined term. Does it mean I can afford the smallest apartment and afford just enough food to survive or are we adding small luxuries to this?
None of the Nordic countries have a minimum wage --on the other hand they don't have a large undercurrent of illegal labor undercutting the minimum natives will accept as a minimum wage.
That said, I don't have a horse in this fight. I don't think business have a "right" to cheap labor and if they can't survive without it, then so be it. Of course people have to understand their services and goods will go up in price and they should be okay with that. Maybe they stop depending on someone else doing and making things for them and start making their own stuff at home.
> None of the Nordic countries have a minimum wage
This is, generously, misleading. In Norway for example the statutory minimum you can pay somebody in a particular sector like fast food will be negotiated with a union for that sector.
> Never was minimum wage equivalent to a living wage.
“It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country." - FDR, who signed for and pushed for the initial minimum wage legislation in the US.
It's really sad to see people repeat this take which is historically completely false.
Nah, most of them are most likely already employed somewhere else at a 25% wage increase.
Note that the unemployment actually didn't spike up according to a different study: https://www.nbcbayarea.com/investigations/california-minimum... so that allows us to assume these people got a better wage somewhere else, at only a marginal increase to the consumer.
It's possible. It's probably too early to tell and things will settle in due time.
One possible outcome is that if high minimum wages are placed across the board in all states and the feds enforce e-verify that we'll become a bit like Switzerland where everyone nominally earns more compared to other OECD countries but also things (good and services) are relatively more expensive too. It potentially could pull people who've been out of the labor pool (undercut by low wages/cheap labor) back in to it, if the right policies are put in place.
It's probably not a bad deal for US workers as we all would have a higher standard of living but also live in a more expensive society --in the end that's probably better for everyone (in the US).
These studies are completely pointless because they only measure one side of the problem.
Minimum wage is minimum productivity. If a business is able to increase productivity, they will pay more and fire staff. If they won't then they shut down. And the side-effect, which cannot be measured by economists so doesn't exist, is that some will evade the limit. The theory isn't that minimum wage reduces jobs, it depends in every case...but the best that can be said is that it has no impact.
Card and Kruger, for example, was/is presented as some kind of massive revolution. It is completely useless. Studies concentrate on fast food because it is one of the only sectors that has managed to increase productivity, the wider consequences are ignored. The only reason this industry for DiD minimum-wage papers exist is to give policymakers a button to push when their popularity is collapsing. The idea of the government dictating minimum labour productivity makes no sense (in the US, the policy mix also makes no sense because you have uncontrolled labour supply but the government sets minimum labour productivity...why? It is heaviest incentive for breaking the laws that you set, minimum productivity is set with the knowledge that it won't apply to many people).
> but the best that can be said is that it has no impact.
You're doing what you disavow here. If it doesn't affect the number of jobs, then it increases the value of that job. If you can sell a carrot for a dollar more, and still sell out of carrots, you have a increased the economic activity without increasing production. The same is true for hours.
This is not about increasing productivity. It's about increasing the share of that productivity that's paid out to workers.
I didn't say it doesn't have no impact on number of jobs. I said that the best that can be said is that it has no impact (I didn't say jobs here at all).
The government deciding the value of X is Y doesn't actually increase the actual value of anything, because that is decided by things the government does not control. Your point about carrots assumes, for some reason that you don't explain, that a firm chooses to sell for a price that is less than market-clearing (this happens all the time with people who make this argument: claims that businesses are both greedy and non-profit maximising). And this model is generally not true of labour either: minimum wage is minimum productivity, that is it, no need to talk about carrots.
Right, and you should be totally clear with people reading your comment: no economic theory supports what you are saying. Wages are productivity, the money to pay wages comes from customers, who choose to pay for something that the worker is producing. Minimum wages do not, and cannot, increase the share of productivity that is paid to workers anymore than the government can demand that shareholders accept lower returns. This is just total economic nonsense.
In Europe the discussion about minimum wage vs unemployment is going on since the 90s. The results show that there is a small correlation. If the former happens in small steps the latter remains stable.
Some greedy employers will lose an extra butter, a few will fire someone and all employees win.
"Relative to employment in the fast food sector elsewhere in the United States" .. could drive a truck through that "elsewhere".
In 1992, New Jersey made just such an increase in minimum wage at fast food restaurants. Card & Kreuger ("Myth and Measurement") analyzed data in adjacent areas in NJ & PA. They found that employment in the NJ area actually increased. Take a look at the first chapter of "Economics in America" by Angus Deaton (Nobel 2015).
Comparing CA to elsewhere in the US (where? everywhere?) looks a bit shady. Given the government agencies are being led by political hacks these days, I don't trust it one bit.
If there is a correlation, and the correlation is causal, I'm not sure how this matches with every fast-food restaurant near me having "hiring, start immediately, no experience needed" posters outside.
I would hope so, since if it didn't everything we know about economics would be wrong. But this question only makes sense if you value all employment equally. If the state lost a tiny amount of jobs, and most of those were among the lowest paying, then I'd want to know A) what's been the impact on cost of living and B) what's been the impact on government welfare spending, before I could begin to assess if it was a positive overall for the state economy.
I’ve seen some interesting research suggesting that higher minimum wages lead to lower turnover, which can lead to some very real cost savings. I had an interesting epiphany while watching a business lecture about calculating costs associated with hiring, that there are very real points in the minimum wage curve (which should be laffer shaped) where raising the minimum wage has the potential to both increase labor participation and decrease total labor costs.
I now like to joke that minimum wage laws are subsidies for businesses too dumb to factor in hiring and turnover costs.
So, this cut out the least fit for work. One group heavily cut out would be those without work experience such as kids and other first entering the marketplace.
Fast food is a stepping stone job, and if employeers have to pay more for labor then they will be pickier about it.
Let's think about the reverse. If we cut minimum wage, the sector would be much more loose about hiring first time workers, convicts, or people just not fit for other jobs. The people could grow their skills and contribute more to society, a society where low end business constantly complain about how hard it is to find skilled workers.
High minimum wage contributes to more people on social safety nets living on low fixed incomes because the gulf between that and paid employment becomes too great and there is no low wage on ramp for them.
This is a good attempt at a thought experiment but it doesn’t bear out at all in the evidence.
You need a fixed number of people to run a restaurant, there’s only so many positions to be filled. You aren’t hiring on extra people and spending a certain amount on labor, they’ll just pocket any excess.
You can invest in automation but today that’s at a cost higher than paying a living wage and with lower service quality.
> You need a fixed number of people to run a restaurant
What? Just varying restaurant hours changes labour requirements. Menu complexity adds another dimension. Quality of service another. Restaurants are highly variable-cost businesses.
if employment reduced, did the industry contract? Or did it maintain its size and make do with less employees?
It's not good for the individuals, but in broader economic terms, an industry that delivered the same value with less people is effectively increasing productivity which is economically generally a good thing. Of course one industry is not a closed system, whether those unemployed people go and contribute somewhere else in the economy or sink into unemployment is a critical question.
If the industry contracted then it's harder to argue it's a good thing.
> It's not good for the individuals, but in broader economic terms, an industry that delivered the same value with less people is effectively increasing productivity which is economically generally a good thing
Not if all (or the vast majority) of the extra value produced is captured by a vanishingly small portion of the population
That is the trend we are following and it is exceptionally bad
In my medium size CA town, the Burger King just flat out closed.
Other than long johns silver in the 1990s, I've never seen a major franchise just quit and close.
Any charts on numbers of gig employees? I see help wanted signs at fast food places all the time, but it may be that these workers are shifting to gig work.
As frustrating as it is as an employee to lose hours, customers are also frustrated by this as quality and speed are reduced. You have fewer employees being forced to perform the same quantity of work. Everything goes downhill and then people eat less fast food, causing the business to lose income and then reducing staffing and the cycle continues.
I avoid all fast food now except for Chick Filet not due to the food itself, which isn't great but just due to the terrible customer service I get everywhere else.
My kid asked me for McDonalds the other day and for once I said yes, we pulled in at 10:20am and ordered 3 chicken biscuits before breakfast ended at 10:30am. They of course asked us to park and after 15 minutes I went inside and asked what was going on. they apologized and said they were out of chicken as they got a rush when I ordered and it takes 7 minutes to cook.
There were a grand total of 4 employees in the store sitting at a busy intersection with a double drive through line and an indoor eating area. Just utter lack of management and employees and customers pay the price.
its 10 minutes before breakfast ends, I'm pretty confident the same rush happens every day at that time. Just such a terrible experience. Definitely saying no next time my kids ask for McDonalds, its not worth 30 minutes of my life to drive through and order a chicken sandwich.
This is a critical point - economists call these "spillover effects" and they're often underexamined in minimum wage studies, as cross-elasticity between sectors can lead to employment shifts rather than net losses.
FRED (the Federal Reserve Bank of St. Louis), has useful data.
First, all food/beverage hospitality workers in California.[1] Huge COVID transient, followed by recovery to almost the pre-COVID level. But no further increases.
Full-service restaurants had a similar transient, but never came back to pre-COVID levels. Employment peaked in mid-2023, and has declined since. Full-service restaurants didn't get the $20 fast food minimum wage. But workers there may have tip income. California does not have a lower "tipped minimum wage", and all tips go to workers.
What FRED calls "limited service restaurants and other eating places" shows about the same curve as full-service restaurants.[3] This includes both the fast food chains and the fast-casual restaurants. If you have to order at a counter, it's "limited service", even if they bring out the food later.
So, the part of the restaurant industry that wasn't affected by the increase shows about the same trend as the part that was. Basically, post-COVID, onsite eating never fully came back. Food delivery became a much bigger part of the industry.)
Those stats are regardless of business size. California's minimum wage law for "fast food" applies only to businesses with at least 60 locations. But it also includes such things as 7-11 stores that sell hot dogs and pizzas heated up on site. So, not an exact match to the FRED categories.
Overall, the COVID transient and its aftermath is bigger than all other visible effects.
[1] https://fred.stlouisfed.org/series/SMU06000007072200001SA
[2] https://fred.stlouisfed.org/series/SMU06000007072251101A
[3] https://fred.stlouisfed.org/series/SMU06000007072259001SA
Why did it only affect California and not other states?
…the California minimum wage?
It's still a net loss of jobs. I'm certain the future will involve increasing automation to further reduce headcount. A McDonald's recently opened near me with no seating, and orders can only be placed through the app or at the drive thru. I spoke with the owner who mentioned two main reasons for this setup: first, ongoing issues with the local homeless population and second, a desire to minimize staffing. Fewer employees are needed when there's no dining area to clean or counter to staff. I’m pretty sure this is the direction things are headed in California.
I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area. (We actually have a fairly robust program that provides housing for folks in need). We have one fast food restaurant in the area and it's a McDonalds. It was one of the main hangouts for folks in the area. We would have weekly meetups there. After Covid, they closed the seating area and installed the touch screens. They went from employing around 7 to 9 folks down to only 3 and talking with the franchise owner, they're not planning to ever hire back up and re-open seating. He did mention that the gross revenue is way down, but net revenue is about the same and his stress in managing the location is way reduced with the headcount reduction and simplification of the business.
Never having to deal with a member of the public inside your property is a huge liability and hence stress reducer.
People like to think that employment is pretty much the only good that does not result in a mismatch of supply and demand from a price floor.
Take for instance a proposal that says "no one is allowed to sell their used car for less than $10k". Maybe the justification is poor people are desperate and sell their car too cheap and all these dealerships and buyers are a monopsony underbidding the real value of the car, profiting off these uninformed, unorganized individual sellers.
Does anyone think this is a good idea? Would anyone bother reading studies contemplating the effect this may have?
No, of course not. Everyone knows that this would essentially mean many cars that would have sold under $10k would just not get sold. Sure some people would benefit, maybe getting a higher price for their car. Some things would shift, maybe people would opt for scooters or e-bikes or something.
But I wouldn't want this price floor if I was on either side, trying to offload a bad car or buying one.
The cost of employment is not comparable to the cost of a particular good. Employment has much more complicated implications on the economy and on society. A minimum wage is set in part to prevent a desperate race to the bottom, and to (try to) ensure something approaching a living wage. It’s a blunt and often ineffective tool, but viable alternatives are scant. The free market won’t solve this one any more than it solves the problem of healthcare.
Minimum wages are an economically imperfect (as you've pointed out) but politically possible way to put some downward pressure on much, much bigger failures of our species and society to have attitudes and policies around acceptable minimums for basic human needs that are even logically self consistent, to say nothing of enlightened.
We can't quite get it together on saying "food, shelter, healthcare are human rights" or it's sinister sibling "we'll let you die in the cold if there's no profit to be had from you".
Those are both consistent, actionable policies, but no one wants a consistent policy on this because everyone gerrymanders it dofferently.
So we get clunky hacks like minimum wage that are sort of the average of Aspirational Star Trek and Aspirational Blade Runner.
It's an interesting point, but it's the closest thing to guaranteeing a minimum return on a person's work and preventing downright slavery that we have.
That's the direction every company is headed everywhere. It's far more prominent in locales with very high labor costs, but once those technologies are easily scalable they will roll out everywhere, even places with cheap labor.
There used to be many grocery and liquor stores that you handed in a list of what you wanted at the counter and the staff collected it for you from behind the counter. With the way stores are locking up items it seems like we're steadily returning to that era.
No, you don’t understand. If the government hadn’t been involved, private organizations would have kept employees around even when cheaper alternatives exist.
This is sarcastic of course. Ideally if our economy distributed rewards across all of society everyone would be for changes like this if they did actually speed up automation
I fail to see the causality how this is caused by minimum wages.
Its not at all imo. Franchised businesses are not in the habit of employing low skill workers as a public service. This data is interacting with both covid effects and infrastructure upgrade/rollover - in other words, it takes a while for companies to adopt affordable touch screen ordering systems and its been phased in at a ton of non-fast food (at least in my area) over the same period of time. Local health grocery store has touch screen ordering at their deli, as well as simultaneously going cashless. Most coffee shops too. Look at most international airports - almost all the kiosks have one or no attendants now.
The causality is raising the minimum wage pushed business to do this sooner rather than later. this is why, as per the study, California lost more jobs than states that didn’t raise the minimum wage
Where do people eat then? Coming from someone completely foreign to such a culture.
There’s almost always still a parking lot because of zoning laws, so you can eat in your car while parked.
This does feel like we are going back to the beginning of how fast-food started (minus the large crew of people)[0]
[0] https://youtu.be/YqyCaATQPtk?t=74
I was thinking of this exact clip! I love this movie.
I have always preferred to sit in my car to eat at a park or some relatively peaceful place in the shade without too much activity. Sitting in a big dirty room with a bunch of people watching me eat has never been comfortable.
At home in front of the television while scrolling their phone
This unfortunately sounds like where the trend has been going at least since Covid.
People started treating "meeting other people in person" as a tiresome chore, and the world is adapting to that change.
> “meeting other people in person” as a tiresome chore.
Someone linked the short story The Machine Stops by E. M. Forster the other day where this is an element. A character makes a big deal of having to meet her son in person, opposed of through the machine.
Written in the 20s, gets a lot of things uncannily correct for a society 100 years later. Video calling, silence/do not disturb mode, notifications, air conditioning, people no longer wanting to look at real things with their eyes, etc.
Very true.
Pre-COVID, I used to go to a small kabob restaurant in Silicon Valley. During COVID, I'd order from them via Doordash. The food wasn't as good cold, though, even if re-heated. After COVID, I started going back in person. Often, I'd be the only in-person customer, despite a steady stream of deliver drivers going in and out. Now, they're out of business.
I was amazed at how good and cheap the food was in Mountain View and Sunnyvale. That is a bummer.
>Pre-COVID, I used to go to a small kabob restaurant in Silicon Valley. During COVID, I'd order from them via Doordash. The food wasn't as good cold, though, even if re-heated. After COVID, I started going back in person. Often, I'd be the only in-person customer, despite a steady stream of deliver drivers going in and out. Now, they're out of business.
Because DoorDash/GrubHub/UberEats/etc. charge the restaurants more than their gross margins. In such an anvironment, unless a restaurant raises prices 25-30%, they're eventually going out of business.
I'd say that these companies are most certainly not providing 25-30% value add. Rather, it's just leeching off restaurants and their customers.
It's disgusting and has killed many, many restaurants where I live (NYC), even though we already had a culture of delivery before these parasites came along.
And more's the pity.
You're implying that food delivery is antithetical to seeing your friends in person. We have people over and then order food all the time.
That owner neglects that the latter fuels the former, and gets to a point where no business can occur at all (given sufficient time horizons).
The owner isn't neglecting it, it's a tragedy of the commons.
If the owner was to overhire, it might reduce the homeless population a little, but at great cost. And other businesses nearby will benefit for free.
Only large coordination at the level of state or national government can afford to implement welfare as a real investment in their citizens. If you do it at the city, county, or corporate level, it's just charity.
We need to detach from the "jobs at any cost" mentality behind your first sentence.
By that logic ending child labor is "still a net loss of jobs."
I mean, here you are talking about a business owner having issues with the local homeless population who are homeless because their jobs don't pay enough to afford housing.
All these business owners race to the bottom paying their employees scraps and then wonder why they have empty dining rooms with no customers to afford their products sold at record-high profit margins.
Obviously, minimum wage doesn't really fix the economy on its own, but it is a very important tool in a toolbox for ensuring that capitalism is restrained from following its worst instincts.
This is in stark contrast to the Berkeley Institute for Research on Labor and Employment study that claimed the law had no negative effects on fast-food employment.
The Berkeley study has been cited quite heavily by policy makers.
https://irle.berkeley.edu/publications/brief/effects-of-the-...
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
https://us.fundsforngos.org/news/nonprofit-accuses-uc-berkel... https://epionline.org/release/biased-uc-berkeley-research-te... https://epionline.org/release/biased-uc-berkeley-research-te...
They did a study of Seattle’s minimum wage that did not hold up well in subsequent studies, in part because their assumptions about how adverse effects would manifest were poor. They seem to have memory-holed that. Seattle’s minimum wage is higher and more broad based than California.
Regardless, with the passing of time the adverse effects have worsened to the point that even proponents in Seattle acknowledge there are serious issues that have resulted which need to be addressed.
California looks like it is trying to speedrun Seattle’s mistakes.
The Berkeley report doesn’t count number of jobs. It looks at pay and number of restaurants operating (both went up).
It could be that part time positions decreased but full time positions increased, along with hours per job position / total hours / hourly pay and restaurants operated. That’d be a good thing for everyone involved (except maybe the cardiovascular health of the customers), and is compatible with both studies’ conclusions.
Small decrease in employment in exchange for ~25% higher wages for those employed? Did I get that right? Obviously every single row in the dataset is a unique human, but overall sounds like a big success?
It depends upon how you define "success." I visit California regularly, and since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices. So now my normal breakfast spot isn't open when I want to go there, so I eat at home. The places I visit when they are open are mostly empty, because the customers don't want to wait longer and/or pay higher prices.
So aside from the fewer employees getting a raise, the businesses are now under financial stress because of the reduced revenue, the customers have fewer options for where to eat, and the State of California and the local city/county governments will receive less tax revenue from these restaurants.
Like most of the other recent California legislation, it's a "success" at further damaging the local economy and encouraging people like myself to stay away.
Is your usual breakfast spot a location with more than 60 locations? The minimum wage increase here only applied to chains with more than 60 locations. A lot of what you're describing is nation-wide. Food is more expensive everywhere. Cost of living in California is up significantly. Rents for restaurants is significantly higher as well (at least anecdotally, my wife's family restaurant has to close because they doubled the rent after their lease was up, I have heard this is incredible common).
This study by UC Berkeley attributed a 3.7% increase in food price because of the minimum wage changes. It's quite likely that food overall getting more expensive is responsible for a lot of what you're seeing.
If we can't afford to pay people in California a wage where they can live here, then maybe the economy overall isn't sustainable? A $20 minimum wage is like $2800 take home per month and in many places that can barely cover rent.
My usual breakfast place, only on the days that I ride my bike along the beach, is a Subway. They previously opened at 6:30am, but now they open at 8:30am.
Depending upon the time of year and when the sun rises, I begin at different times, but usually around 6-7 am. I'm usually done before 8am, and the Subway was a convenient place to stop on the way home.
I don't cook much when I'm in California, and there are still some good restaurants near me there. Those prices have risen too, but it's high-end food, so I don't mind as much. There's a Carl's Jr. about half a mile away, and it's been closed for 4-5 months. It's in a prime location (on PCH), but nobody has moved in yet.
There's already a federal minimum wage, and a state minimum wage, but now there's a restaurant minimum wage too, and it was passed in California without any input from the food industry, or any concern for the impacts it would have on them.
Most of the workers in those places are students (high school or college), and they're not yet out on their own. They took the job knowing that they wouldn't be earning a living wage, and yet they still wanted the work. To me, it doesn't seem very fair to the employers when the government steps and tries to "solve" a problem, causing a major disruption to their industry. This is the same sort of behavior the Soviet and Chinese politburos demonstrated during the peak of communism in those places, and the unintended consequences almost always made things worse.
The property tax laws need to force people to maybe not sit in large empty houses.
Why, if you have the money, should you be forced to have roommates or tenants? What sort of freedom is that?
> I've noticed reduced hours, reduced staff, and increased prices.
That's not exclusive to California - my state didn't have a similar minimum wage law but they have the same changes in their restaurants.
The bad news is, I basically stopped going out because I couldn't rely on businesses being open when I wanted to go.
The good news is, I've lost a lot of weight from not going out.
Was your normal breakfast spot subject to AB 1228 regulations?
Is your normal breakfast spot a fast food joint? If it is not, it is my understanding that is not affected by the "higher minimum wages for fast food workers" regulation.
If it is a fast food joint... well, I can't speak for all of California, but the fast food places in the section of San Francisco that I live (and roam around) in seem to have a reasonably healthy amount of customers in them.
Perhaps things are different where you are, but I've noticed food getting markedly more expensive, have heard of commercial rents getting higher and higher, and have heard that many of the folks who would have done waitstaff jobs have decided to fuck off for places that were (at the time, if not now) less expensive than California. Oh, and there was the whole "flight from the expensive cities because WFH means that many folks don't have to tie themselves to an expensive, small apartment in a city they don't really like" thing a while back that gutted the downtowns (and leisure districts) of some-to-many big cities because -like- many folks exercised their new option to leave and left.
Were it me, I'd consider blaming factors like those before I blamed modest increases in wages.
Labor is typically ~33% of a restaurants costs.
I’d point to savings-driven relocation as well. It’s why some suburban towns have seen an increase in number of restaurants even as options in cities decline.
If the desire is to reverse that trend, the best way to move the needle is to bring housing prices (by far the largest living expense) in cities back down to earth so they’re affordable to normal people again, however that’s best done (probably building more housing, unlike SF which decided to instead prioritize offices and retail, leaving it vulnerable when the pandemic hit).
This only makes sense if staffing is a major cost factor, which it isn't.
It is. Typically over 30%, higher in fast food.
https://www.5out.io/post/a-detailed-breakdown-of-restaurant-...
You need to factor rent increases into your thinking, both commercial and residential. Your breakfast spot is a business that no longer makes financial sense to operate.
Feed the location of a business into a trip planner and note every neighborhood within reasonable commute radius. Calculate the average cost of renting a room in these areas and then multiply by three. That's your de facto minimum wage because you have no applicant pool beneath it.
Adding on to this, your competitors in a better financial position are all paying well above minimum. There's probably a McDonalds across the street starting people at five bucks an hour more than you, and they have that wage plastered on a banner right out front.
People with better fitness for employment had their situation improved. People with less fitness for employment may be more likely to be harmed.
That’s a big success for the former group for sure. Whether that’s a policy success is slightly hazier than you presented I think, without other interventions to support those who are more likely to be harmed by the reduction in employment.
If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.
I agree that a lost job should carry some kind of premium compared to a total increase in wages paid, and you also have to go and look at the total hours worked to get a good picture, but if the total relative increase in remuneration was higher than about 10% or so I think that's probably enough to be able to hand wave the employment decrease.
If it only turns out to be 5% I'd be a bit iffier about it.
In the UK we have a pretty generous minimum wage (for over 21s), I think even relative to $20 in California, and the effect on employment has been very small while minimum wage jobs now give a pretty OK life, so I'm inclined to support high minimum wages generally.
> If it's actually only a 2.7% decline in employment relative to baseline then the increase in total wages paid would have to be very small to make this a bad policy.
That seems unlikely to be just that though, this study was just on the people who lost jobs. If 20,000 people are out of a job, there is probably another larger cohort on less hours. And we also don't know how much wages rose. The people who were fired were the ones who could only justify being paid the minimum. The ones who stayed might already have been paid more like $17, $18 or $19/hr.
So yes to what you say, but the study doesn't say anything about whether total compensation went up or down.
Also low minimum wages are actually just corporate welfare.
The gap between what a minimum wage job pays and what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die, which means the jobs don't get done, so that means the resource spent by governments or charities as a result of a low minimum wage is a subsidy for the employer. Instead of paying what it costs they get it for cheaper to create a fiction of "employment".
This right here. We should demand not to subsidize the richest companies in the world. The Walmart family can afford to pay their employees a living wage. Instead you and I pay for that in taxes, while they extract billions in profit and value from their business.
If anything we should be subsidizing small businesses to give a more level playing field against companies with global economies of scale.
> We should demand not to subsidize the richest companies in the world.
Not without overturning Dodge Bros vs Ford, I believe. The ruling created shareholder primacy, the privilege of shareholders to have maximum bites of the corporate apple. It rigidly protects shareholder (and by ext, executive) interests.
The never-ending wealth that flows from that - first buys politicians, then officials, judges and (eventually) every part of regulation & corporate oversight.
ref: https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
> what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die
I take this to mean the assistance covers the gap to prevent death.
I would amend that to note the following: We can exist in a state of profound poverty w/o assistance for a very long time without dying. Persistent Hunger and crisis-level stress kills very indirectly; it commonly takes decades.
source: me + 5 kids. a decade of hunger-level poverty in a red state.
This isn't so straightforward. I would argue that they have some effect on the customers as well.
In the US, fast food restaurants are remarkably cheap, which is probably caused by low wages as well. If the workers were paid Danish or Swiss wages, quite a non-trivial part of the US population would be no longer able to afford a visit.
Now there is a wider question if that wouldn't actually improve their health, but that is already a bridge too far from the conversation. Miserly wages of restaurant workers do make the restaurants themselves more affordable to the general public, and the customers seem to be content about it.
> I agree that a lost job should carry some kind of premium compared to a total increase in wages paid
I don't think it's nearly that clear. Western nations are at a near record low unemployment rate. We should want to remove low paying jobs.
But that was the best job they could find. Presumably those people are going to be unemployed now. I mean, maybe they're kids and their families will have enough slack to just adsorb the change but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr. So it actually costs the broader economy more than the salary they lost - firstly the work they were doing isn't being done, secondly someone else now has to work to earn the keep of the person who was just laid off because the job that paid them around what their skills were worth just got regulated out of existence.
You'd probably have to know more about what the jobs were. Certainly there's more self-service and fewer people waiting around to help customers in large stores than there were at one time. And small-time retail has also fairly visibly declined in favor of big-box and online purchases.
The abstract states that there are 2.7% less fast food jobs, not 2.7% less jobs. There might be 2.7% less fast food restaurants as a result of this change, but in their place will be other businesses that employ people of higher than minimum wage. Those businesses might hire the best fast food workers while the average fast food worker continues to be employed doing fast food. As a result, there may be no people who have now become unemployed as a result of this change, and only increases in wages. The data is inconclusive.
Regardless, instead of arguing over which commercial property takes which spot and trying to engineer the perfect fit with the limitations we are dealing with, we should be increasing the amount of places that are zoned for commerce. This will bring increased demand for labor, which will increase wages.
>in their place will be other businesses that employ people of higher than minimum wage.
Why would raising fast food minimum wage create these businesses?
If one of these fast food places shuts down, it's not like the lot is just going to sit vacant forever.
The primary effect of these types of laws is that businesses that employ fast food workers are less profitable, and thus when they compete against other businesses for a given lot, will bid less for the land. If the marginal buyer changes, it would have to do so to a business that relies less on minimum wage fast food workers.
That isn’t what’s happening. A lot of these areas are permanently hollowing out far beyond fast food, at least with respect to local businesses. Lots of places in decent neighborhoods are boarded up and stay that way. This is an issue even in some cities with strong population growth.
I recently had the mayor of a major west coast city tell me this was a permanent trend, that there was no way to reverse the loss of these small businesses and that the disposition of all that real estate was a major issue, compounded by a loss of basic neighborhood services like groceries that used to operate out of this real estate.
The future isn’t other businesses that somehow magically pay higher wages. The future city planners are seeing is all delivery all the time from warehouse districts, and ghost towns of commercial real estate for which there is no purpose. Even city centers are starting to turn into suburbs in terms of occupancy density.
> their place will be other businesses that employ people of higher than minimum wage
Worth noting that California’s regime extends to fast food industry exclusively.
Presumably some of those job losses were absorbed by industries still paying minimum wage - retail, construction, warehousing, etc.
Presumably if those losses were not absorbed by those low-skill sectors, the job loss figure would've been higher.
So I guess, as you said, data is conclusive.
> but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr
Are you implying that there are people in the world who just can't do anything productive enough to be worth $20/hour? That they are so useless that this was the only thing worth doing with them?
That seems fucking insane. If that's true, we have a huge problem with misallocation of value.
I think it's self-evidently true that there is a not ignorable group of people who can't create enough value to be worth being paid $20/hr (plus the employer-paid overheads) and have that be something that an employer would voluntarily do.
Around 10% of the population does not score highly enough on the ASVAB (an aptitude test for the military) to qualify for military service. The military, like any large employer, has an awful lot of jobs that require minimal skills and aptitude and for 10% to be Category V [unqualified for military service] based on aptitude, I would expect they wouldn't be the employees to create $20+/hr in value for private sector or other government employers either.
There are a significant number of people with developmental conditions such as Fetal Alcohol Syndrome or Down's Syndrome who, realistically, are never going to be capable of generating $20/hr of economic value. The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.
What do you think happened to the tens of thousands that lost their jobs? Are they homeless now?
I'd hope we could find something more productive for them to do.
> Small decrease in employment in exchange for ~25% higher wages for those employed?
It's a 25% higher minimum. It doesn't mean everyone was making the minimum before the law. Certainly not all were. (It would be interesting to know actually how much the wages went up on average.)
Also, do we know if prices went up? Because that could have a negative effect on the rest of the local population.
It's too soon to say. Increasing the cost of labor will reduce jobs in the short term, and increase the cost of fast food. In the medium term, that may lead to people cutting back on fast food, which then leads to more job loss.
If fast food companies have perfect knowledge of their market, then the immediate job loss would be all that happens, but they don't so it will take some time to adapt to the new market, and see if consumers will bear the increase in cost.
That's not even considering substitutes for labor, which have never been as competitive as they are now. AI, robotics, single-purpose machines, etc. One negative to a minimum wage is that we don't actually know the market price of labor. When there is a shift from humans to machines for labor, it will happen quickly and without warning, rather than slowly as humans become dissatisfied with decreasing wages.
Also, you only really need to cover any increased taxes, everything else you pay them is someone else's income (fast food workers probably spend almost all their income). So your getting a big income increase to people very likely to spend it, this creating more employment.
Maybe here this will be offset by decreases in welfare program usage and the very, very high effective marginal tax rates that creates.
Indeed, the positive for increasing minimum wages is that it makes robotics and automation more cost effective.
With Silicon Valley being in California, one might think this is done on purpose—favoring the automation sector over the wage holders.
Once these companies get some scale in California, they can then drive prices lower to be competitive in other states.
In the end, sacrificing minimum wage workers in California will lead to (generally California based) automation companies taking this revenue across the country.
It does really disfavor low productivity industries.
Actually, a core part of Sweden's original plan for social democracy was to have "solidaristic wage policy" where high wage workers would accept a lower wage in exchange for a higher one for low wage workers. The idea was you'd both squeeze low productivity businesses out _and_ provide a windfall to high productivity ones, who could expand faster.
Labor reduction in fast food doesn't necessarily look like 'automation'
It's things like self-ordering, machines that make change (if cash handling still matters), conveyor ovens/charbroilers, more centralized food prep, self-service and automated beverage dispensing.
Plenty of automation is happening outside of California though. Here's an Illinois bases company's blurb about beverage automation [1].
Reducing labor in small amounts increases service capacity, and in large enough capacity lets you operate a restaurant with a smaller minimum crew.
[1] https://dimontegroup.com/projects/cornelius-quick-serve-pro/
> Labor reduction in fast food doesn't necessarily look like 'automation'
> It's things like self-ordering, machines that make change (if cash
> handling still matters), conveyor ovens/charbroilers, more centralized
> food prep, self-service and automated beverage dispensing.
Those are things that were previously being done by people that are now being done by machines. In other words, automation.
Robots will always be cheaper, it is not a matter of if they will come, it is a matter of when. That is no reason the state should subsidise workers for big corporations by allowing them to pay such low income that workers are often eligible for social security.
First, 2.3 to 3.9% decrease in fast food employment in a year isn't really small given only a fraction were affected by increase.
Second, the effective wage increase for fast food employment was actually quite a bit lower than 25% since several large municipalities had higher minimum wages and not all fast food restaurants were affected.
Third, employment appears to still be dropping.
It's 100% lower wages for those who lost jobs.
If the total salary has gone up, for less work done, it is a positive change. You can solve the inequal distribution via taxes and benefits.
Start: 100 people paid $100
After minimum wage change: 90 people paid $125, 10 people paid $0
After tax increase: 90 people paid $113 + $12 taxes, 10 people paid $108 from taxes
Now everyone is paid at least as much as they were before, and fewer people are forced to perform labour
In practice it was only 3% unemployment not 10%, which means the tax increase is less and there is more of an incentive to continue working. You can also pay the displaced workers less than their original wage, to reach an equilibrium where everyone is happy with either work+more money, or leisure+less money. Or have it be age-based with an earlier retirement. Or have people work part-time.
We need to stop seeing having a job as being inherently good. Being able to live is good. Humanity should strive for 100% unemployment.
"Less work done" doesn't look like a positive change, you can't tax your way out of a smaller pie. Specially if you strive for humanity to produce no pie to start with.
Then we should increase the minimum wage to 200$/hr or more.
The total salary would go down if you did that
Then we should just increase the presidential salary to 110% of the total 2024 US workforce salary.
Total salary going up for less work can truly hurt people that are low, aptitude, low skill, and do not produce sufficient value to hit minimum wage.
Well, on the other hand, it can be seen as something like a eugenic program to cleanse society of those unworthy of the state. After all, there is nothing stopping them from going to work somewhere else where there is no such minimum wage.
Also consider non linear utility of money.
For hamburger flippers? A 25% increase in wage might well be superlinear for some of them (eg better circumstances and opportunities for kids)
Yeah but the other people lost their jobs and 100% of wages. So you can compare net utility gain or loss.
Yes but that’s not the argument you made.
I didn’t make any argument. I was expanding on parents point.
Yes and I was responding solely to your expansion, which I believe is inapplicable here.
They are working the same hours elsewhere for free?
They might be living in a tent on a sidewalk for free if you ban them from working.
They might get another job.
People dont think holistically about the economy. They think there are jobs. When they go there are that fewer jobs. Immigrants come in a steal jobs. Etc.
But in an economy, each richer consumer creates more jobs. The McD employees now buy better food, creating work for that supply chain. Or they can pay for education. Or they buy a takeaway coffee more often.
The immigrants who come and do jobs work hard for lower pay them spend that money into the economy.
Why not set very low maximum wage ceilings and have 100% employment? /s
Are you going to reduce lottery payouts and maximum stock investments as well?
Will I still be allowed to hunt for food?
Society is something better encouraged than gamified.
> Are you going to reduce lottery payouts
They will decrease on their own if people think about where to get food, and not about extra money for the lottery.
> and maximum stock investments as well?
No, there are no restrictions. Any amount of investment. But there are only government's stocks and the terms of return on investment are determined by the government
> Will I still be allowed to hunt for food?
Only deep in the sparsely populated provinces. To avoid armed rebellions.
> Society is something better encouraged than gamified.
You'll be surprised at what methods encourage people best.
Read the biography of Korolev, who sent the first satellite and the first man into space. A case was fabricated against him, he was sentenced to 10 years in a gulag, but after a year he was transferred to a prison for engineers, on the condition that he will be a very effective engineer.
And he was. The results of such encouragement were amazing and almost unachievable by any other methods.
This has been tried, and actually does work reasonably well.
Well, not maximum wages as policy but policies where high productivity workers take a lower wage than they could individually bargain for in exchange for boosting wages of low productivity workers.
It provides a windfall to the most productive industries and a squeeze to the least productive ones.
Because that happens naturally without a law. People lower the wage they ask for until they get a job.
I think they were sarcastic.
Thanks, yes, I was trying to show how the alternative is absurd
Why not set very high minimum wage floors and make 100% of worker rich? /s
Turns out economics is actually more difficult than "higher minimum wage is good/bad".
Correct?
Nah, they didn't lose them, they got employed elsewhere for what they are worth, so if we do random calculations, it was probably something like 25% increase for many of them.
The unemployment statistics were not influenced by raising the minimum wage here, so you can assume that the people who lost their low paid jobs simply moved elsewhere and got better paid jobs. It's mostly the employers' loss, which is how it should be. If you can't afford to start a business, don't start a business.
Yes. The paper doesn't go into detail about the wider economic effects in the state in business growth, tax revenue, and less reliance on public assistance.
One possible reason: People don't need a second job anymore.
Maybe a good trade if it was just a loss of employment. But there are other downsides...like fewer hours and higher prices.
If you assume the minimum needed for life is X, I’d say optimizing for the maximum receiving X+ is a better outcome than fewer getting X++
> overall sounds like a big success?
It depends on how many hours were worked. Which the paper did not measure.
Sounds like a net increase then in the money put into the California economy. Perhaps that has helped other sectors as well — like retail seeing more money spent in their stores as a result.
And the "decrease in employment" could very well be attributed to other factors, like inflated prices and shallow pockets of consumers, translated to them skipping on fast food more often...
Some things often overlooked in minimum wage discussions:
- Wages often go over or close to the minimum anyway, due to market forces, and do so without costly bureaucracy/enforcement/taxation/distortion
- Minimum wages make everyone whose marginal value is less than the minimum wage unemployable (since you would choose not to hire someone for $20/hour if their marginal value is $15). This is disastrous for someone who'd love to work at $x/hour, but who lives in a state which legislates a minimum wage > $x/hour, since they go from being employed at a low wage to unemployed.
> Wages often go over or close to the minimum anyway, due to market forces, and do so without costly bureaucracy/enforcement/taxation/distortion
By "minimum", do you mean "statutory minimum"? I'm not sure what the policy implication of this argument would be otherwise – an argument against wage and hour enforcement?
The 18,000 people who lost their jobs may disagree.
These 18,000 are most likely employed somewhere else at 20-25% wage increase. Note that a different study didn't see a rise in unemployment: https://www.nbcbayarea.com/investigations/california-minimum... which means that these people affected actually got a better living standard.
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
https://us.fundsforngos.org/news/nonprofit-accuses-uc-berkel... https://epionline.org/release/biased-uc-berkeley-research-te... https://epionline.org/release/biased-uc-berkeley-research-te...
California created nearly one in five of the nation’s new jobs - https://www.gov.ca.gov/2024/08/16/california-created-nearly-... - August 16th, 2024
> California’s job expansion has continued into its 51st month, with Governor Gavin Newsom announcing that the state created 21,100 new jobs in July. Fast food jobs also continued to rise, exceeding 750,000 jobs for the first time in California history.
> “Our steady, consistent job growth in recent months highlights the strength of California’s economy – still the 5th largest in the entire world. Just this year, the state has created 126,500 jobs – solid growth by any measure.”
This is slightly out of date; California is now the world’s fourth largest economy as of April 2025, passing Japan. I assert the data shows the state does not have a job creation issue.
https://www.gov.ca.gov/2025/04/23/california-is-now-the-4th-...
> Wages often go over or close to the minimum anyway, due to market forces, and do so without costly bureaucracy/enforcement/taxation/distortion
Yes, when there is an shortage or competitive number of low wage workers, not when unemployment rate is approaching 5% overall and close to 20% for low income earning bracket in most places.
That's the virtue of the pricing system! The invisible hand means if wages are low in particular profession, it encourages looking elsewhere, particularly in professions in short supply, whose wages will be high.
Yeah, nah, the idea that the problem with low income workers is that they're not pulling themselves by their shoestrings properly is well and thoroughly debunked.
People don't work in low income jobs because it is the easiest option, but because it is the only option often.
> it encourages looking elsewhere
Which is why the only rational position of a true believer in the free market is to abolish international borders.
For fast food, the marginal value of an hour of work is a measure of how much a business can make from labor and the position, not some innate quality of the person. It’s flipping burgers not rocket science.
The study is sound, pretty small impact considering the increase in living conditions. What surprises me is people arguing that somehow a business is more important than livable wages. Americans and slavery really is a love story
3.2% decline in a year is massive because a year is way too short a time to see anywhere near the full effect due to things like leases often being for 10 years, technology rollouts being slow, etc. On a 10 year timeline i would expect tjat number to be much higher. Its a value judgement whether the wage was a good idea or not but it does us no good lying to ourselves about what that judgement actually cost
If your goal is to make sure anyone who wants a livable wage can get one, you can’t just decide you don’t care about the things that produce them. There’s a number of areas in California that already suffer from a lack of businesses; you may be more familiar with this phenomenon by the labor-focused name we usually use for it, “high unemployment”.
That's what you get after decades of relentless propaganda. Anything remotely socialist is completely taboo there.
"Decades of relentless propaganda" also known as the "the 20th century"
Really clever. Bet you'd love it being a coal miner in the Gilded Age. "Hum, no, livable wages are literally communism, you wouldn't want to kill millions, would you? I'm really smart."
You're exactly what I was talking about. Indoctrinated into being absolutely opposed to anything in favor of workers, spontaneously regurgitating those same few tired "arguments".
The poorest people are not the ones working minimum wage full-time. However, the poorest do want to purchase take-out. Increasing the minimum for fast food realistically helps a pretty minute demographic of workers, but the carry-over cost to consumers means that poor people can afford less fast food.
Maybe that's not such a bad thing, but if it's meant to help the poor (who either earn nothing or earn much less consistently) it's pretty ineffectual at it, particularly when accounting for differences in cost-of-living, and the types who typically work minimum wage fast food in particular. Walk into a McDonalds and you'll mostly see students and immigrants, that's not "the poor". "Livable" needn't arbitrarily mean a spacious 1-bedroom apartment either, which is why migrants paid below-market wages don't worry about rent.
Cash transfers and other schemes are better. We already do that to a small extent and could just expand it.
Edit: should clarify, it's a balancing act because a higher main wage on net can be beneficial, but after a certain level will lead to undesirable effects
Amazing how they are all universally experts in economic analysis of minimum wage. This thread is a goldmine. If only they educated themselves in collective bargaining next.
As always, the world is quite messy and one study doesn't really tell us very much. Maybe the Californian fast food sector is just having a tough time for unrelated and coincidental reasons.
However, the theory always said that a minimum wage rise reduces the number of jobs so it is a strong chance that around 20,000 people were put out of work by this policy.
The theory was raising the minimum wage wasn’t important because it’s mainly just kids who work after school jobs for minimum wage, right?
I’d like to see if there’s an increase in GPAs thanks to greater time for studying, or greater fitness from having more time to play a sport and lesser proximity to french fries.
It's been a generation since minimum age workers were mostly high school kids.
And now it's what, temporary immigrant visas?
https://usafacts.org/articles/minimum-wage-america-how-many-...
> White women and Black or African American women have the highest rate of earnings at or below federal minimum wage, at 1.5% and 1.4% of hourly workers, respectively. Among all groups reported, Asian men have the lowest share at 0.5%.
>2.3% of hourly workers ages 16 to 24 earn $7.25 an hour or less, 1.2% of hourly workers ages 25 to 34 earn the minimum wage. Less than 1% of hourly workers older than 35 years old earn the minimum wage.
> However, the theory always said that a minimum wage rise reduces the number of jobs so it is a strong chance that around 20,000 people were put out of work by this policy.
20,000 people were put out of jobs by employers who didn't want to pay them what they are worth and instead wanted to exploit them. If you can't afford to pay livable wages to your workers, your business shouldn't exist.
Aside from really terrible home experiences for a tiny minority, a part time job for a 15 year old doesn’t need a “livable wage”
We don’t need kids working in coal mines but we also don’t need to make it near impossible for them to get work experience at a part time job because their skill level doesn’t align with $20/hr.
A 15 year old DOES need a living wage. How else are they going to save for post-secondary education? Is keeping them out of post-secondary preferable to you? Maybe your parents paid for yours, but not everyone has that.
Seems like if McD needs this sort of labour its a weird business model. It can only deliver by paying people supported by their parents who are doing the work for pocket money or experience. And can only work outside of school hours and will need to quit in a year or two.
Now if they pay the teenager half the wage the same adult is doing then someone is getting a raw deal.
solution : youth wage, below the standard minimum for the first year of work but that's not good enough for people who decided to close business because they cannot exploit anymore.
This creates an incentive to hire lots of young people and not hire unskilled older people.
In the UK which has a youth wage, has had negative productivity growth, and has had a series of extremely unpopular governments who needed to use minimum wage growth to support their growth, you have seen large employers mix towards younger staff (where that is possible, in other cases you have seen employers use government programs to import below minimum wage migrants) and let go older staff en masse (employers in the UK also have auto-enroll into pensions, but only over 22).
It simply isn't possible, particularly in economies that have structural problems, for productivity growth to just appear magically when politicians request it.
This is a classic problem with economic intervention: you intervene, change incentives, agents do something unexpected, and the result is more intervention, more distortion, on and on. Politically, this is gold because politicians look like they are doing something. No-one asks whether that thing needs to be done at all.
California is home to the largest number of illegal immigrants being exploited for cheap farm labor. If CA really cared about exploited people, they would have done something about that. And by done something, I don’t mean encouraging and protecting its continuation.
Border controls and dealing with illegal immigration is under federal jurisdiction. What do you expect California to do about it?
How about not encourage and exacerbate illegal immigration? https://mayor.lacity.gov/news/mayor-bass-issues-executive-di...
> Aside from really terrible home experiences for a tiny minority, a part time job for a 15 year old doesn’t need a “livable wage”
Said who? The same people who don't pay internships.
> but we also don’t need to make it near impossible for them to get work experience at a part time job because their skill level doesn’t align with $20/hr.
When minimum wage goes up, other more skilled labor also goes up, and adults will go somewhere better paid. Then the business will have no choice but hire the kids at the $20/hr and they will get that work experience you so want to bestow upon them. It's funny you are trying to twist it like it's gonna be a problem to find work experience for the poor poor kids, while all we know the business care about is how to exploit people at the lowest possible pay.
It's always "think of the children" with a specific crowd, an unhealthy obsession with children, I'd say.
Think of the children and ban XYZ books cause poor children can't comprehend what they are reading (allows us to ban books we don't like)
Think of the children and introduce chat control so we can track everybody and monetize their data (allows us to exploit everybody)
Think of the children and don't raise the minimum wage cause poor children can't find internships and part time jobs (allows us to exploit everybody)
There is a pattern here, not sure if you are ready to acknowledge it.
Your utopian worldview has come up against the reality of 18k people being out of work.
“We are going to increase minimum wage so you can have a livable wage!”
“Yay!…wait now I have no wages. Why didn’t this work like you said?”
> “Yay!…wait now I have no wages. Why didn’t this work like you said?”
It did. https://www.nbcbayarea.com/investigations/california-minimum...
"Though in the same month, the U.S. Bureau of Labor Statistics showed California had approximately 750,000 fast food jobs, roughly 11,000 more than when the higher minimum wage law took effect"
"The Center on Wage and Employment Dynamics at UC Berkeley compared Glassdoor job posts and online food menu prices two weeks before the minimum wage raise and 2 weeks after. It found that wages increased by 18%, employment numbers remained stable and menu prices increased by only 3 to 7%, or 15 cents on a $4 burger."
Employment numbers remained stable, which is great, meaning the 18k people now are employed at other places at at least 20-25% wage increase. I will repeat it again: If a business can't afford to pay its workers, the business shouldn't exist.
Didn’t want to often can mean cannot. Many of those businesses would go bankrupt. Also some people who may have started a business will now forgo that possibility.
Now, for many that’s okay. People just have to be okay that that happens.
Also, now those people affected have no wages.
If a business can't provide a living wage, then whoever is running it is bad at doing so or chose the wrong business model. They should close. Why do you want poor business operators to remain in business?
There are many self-employed people in the third world who do not earn "living wages" what do you propose they do?
Never was minimum wage equivalent to a living wage. A living wage is an ill-defined term. Does it mean I can afford the smallest apartment and afford just enough food to survive or are we adding small luxuries to this?
None of the Nordic countries have a minimum wage --on the other hand they don't have a large undercurrent of illegal labor undercutting the minimum natives will accept as a minimum wage.
That said, I don't have a horse in this fight. I don't think business have a "right" to cheap labor and if they can't survive without it, then so be it. Of course people have to understand their services and goods will go up in price and they should be okay with that. Maybe they stop depending on someone else doing and making things for them and start making their own stuff at home.
> None of the Nordic countries have a minimum wage
This is, generously, misleading. In Norway for example the statutory minimum you can pay somebody in a particular sector like fast food will be negotiated with a union for that sector.
> Never was minimum wage equivalent to a living wage.
“It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country." - FDR, who signed for and pushed for the initial minimum wage legislation in the US.
It's really sad to see people repeat this take which is historically completely false.
> Also, now those people affected have no wages.
Nah, most of them are most likely already employed somewhere else at a 25% wage increase.
Note that the unemployment actually didn't spike up according to a different study: https://www.nbcbayarea.com/investigations/california-minimum... so that allows us to assume these people got a better wage somewhere else, at only a marginal increase to the consumer.
It's possible. It's probably too early to tell and things will settle in due time.
One possible outcome is that if high minimum wages are placed across the board in all states and the feds enforce e-verify that we'll become a bit like Switzerland where everyone nominally earns more compared to other OECD countries but also things (good and services) are relatively more expensive too. It potentially could pull people who've been out of the labor pool (undercut by low wages/cheap labor) back in to it, if the right policies are put in place.
It's probably not a bad deal for US workers as we all would have a higher standard of living but also live in a more expensive society --in the end that's probably better for everyone (in the US).
These studies are completely pointless because they only measure one side of the problem.
Minimum wage is minimum productivity. If a business is able to increase productivity, they will pay more and fire staff. If they won't then they shut down. And the side-effect, which cannot be measured by economists so doesn't exist, is that some will evade the limit. The theory isn't that minimum wage reduces jobs, it depends in every case...but the best that can be said is that it has no impact.
Card and Kruger, for example, was/is presented as some kind of massive revolution. It is completely useless. Studies concentrate on fast food because it is one of the only sectors that has managed to increase productivity, the wider consequences are ignored. The only reason this industry for DiD minimum-wage papers exist is to give policymakers a button to push when their popularity is collapsing. The idea of the government dictating minimum labour productivity makes no sense (in the US, the policy mix also makes no sense because you have uncontrolled labour supply but the government sets minimum labour productivity...why? It is heaviest incentive for breaking the laws that you set, minimum productivity is set with the knowledge that it won't apply to many people).
> but the best that can be said is that it has no impact.
You're doing what you disavow here. If it doesn't affect the number of jobs, then it increases the value of that job. If you can sell a carrot for a dollar more, and still sell out of carrots, you have a increased the economic activity without increasing production. The same is true for hours.
This is not about increasing productivity. It's about increasing the share of that productivity that's paid out to workers.
I didn't say it doesn't have no impact on number of jobs. I said that the best that can be said is that it has no impact (I didn't say jobs here at all).
The government deciding the value of X is Y doesn't actually increase the actual value of anything, because that is decided by things the government does not control. Your point about carrots assumes, for some reason that you don't explain, that a firm chooses to sell for a price that is less than market-clearing (this happens all the time with people who make this argument: claims that businesses are both greedy and non-profit maximising). And this model is generally not true of labour either: minimum wage is minimum productivity, that is it, no need to talk about carrots.
Right, and you should be totally clear with people reading your comment: no economic theory supports what you are saying. Wages are productivity, the money to pay wages comes from customers, who choose to pay for something that the worker is producing. Minimum wages do not, and cannot, increase the share of productivity that is paid to workers anymore than the government can demand that shareholders accept lower returns. This is just total economic nonsense.
In Europe the discussion about minimum wage vs unemployment is going on since the 90s. The results show that there is a small correlation. If the former happens in small steps the latter remains stable.
Some greedy employers will lose an extra butter, a few will fire someone and all employees win.
"Relative to employment in the fast food sector elsewhere in the United States" .. could drive a truck through that "elsewhere".
In 1992, New Jersey made just such an increase in minimum wage at fast food restaurants. Card & Kreuger ("Myth and Measurement") analyzed data in adjacent areas in NJ & PA. They found that employment in the NJ area actually increased. Take a look at the first chapter of "Economics in America" by Angus Deaton (Nobel 2015).
Comparing CA to elsewhere in the US (where? everywhere?) looks a bit shady. Given the government agencies are being led by political hacks these days, I don't trust it one bit.
Circa 1992 would the area be increasing in population and so employees to service that volume?
If there is a correlation, and the correlation is causal, I'm not sure how this matches with every fast-food restaurant near me having "hiring, start immediately, no experience needed" posters outside.
I would hope so, since if it didn't everything we know about economics would be wrong. But this question only makes sense if you value all employment equally. If the state lost a tiny amount of jobs, and most of those were among the lowest paying, then I'd want to know A) what's been the impact on cost of living and B) what's been the impact on government welfare spending, before I could begin to assess if it was a positive overall for the state economy.
I’ve seen some interesting research suggesting that higher minimum wages lead to lower turnover, which can lead to some very real cost savings. I had an interesting epiphany while watching a business lecture about calculating costs associated with hiring, that there are very real points in the minimum wage curve (which should be laffer shaped) where raising the minimum wage has the potential to both increase labor participation and decrease total labor costs.
I now like to joke that minimum wage laws are subsidies for businesses too dumb to factor in hiring and turnover costs.
So, this cut out the least fit for work. One group heavily cut out would be those without work experience such as kids and other first entering the marketplace.
Fast food is a stepping stone job, and if employeers have to pay more for labor then they will be pickier about it.
Let's think about the reverse. If we cut minimum wage, the sector would be much more loose about hiring first time workers, convicts, or people just not fit for other jobs. The people could grow their skills and contribute more to society, a society where low end business constantly complain about how hard it is to find skilled workers.
High minimum wage contributes to more people on social safety nets living on low fixed incomes because the gulf between that and paid employment becomes too great and there is no low wage on ramp for them.
This is a good attempt at a thought experiment but it doesn’t bear out at all in the evidence.
You need a fixed number of people to run a restaurant, there’s only so many positions to be filled. You aren’t hiring on extra people and spending a certain amount on labor, they’ll just pocket any excess.
You can invest in automation but today that’s at a cost higher than paying a living wage and with lower service quality.
> You need a fixed number of people to run a restaurant
What? Just varying restaurant hours changes labour requirements. Menu complexity adds another dimension. Quality of service another. Restaurants are highly variable-cost businesses.
> Fast food is a stepping stone job, and if employeers have to pay more for labor then they will be pickier about it.
Why? It would seem to me that there's plenty of room in the balance sheets to just pay people more.
if employment reduced, did the industry contract? Or did it maintain its size and make do with less employees?
It's not good for the individuals, but in broader economic terms, an industry that delivered the same value with less people is effectively increasing productivity which is economically generally a good thing. Of course one industry is not a closed system, whether those unemployed people go and contribute somewhere else in the economy or sink into unemployment is a critical question.
If the industry contracted then it's harder to argue it's a good thing.
> It's not good for the individuals, but in broader economic terms, an industry that delivered the same value with less people is effectively increasing productivity which is economically generally a good thing
Not if all (or the vast majority) of the extra value produced is captured by a vanishingly small portion of the population
That is the trend we are following and it is exceptionally bad
As restaurants are replaced with robotics there will be severe job losses to this sector. Temporary measures cannot alter the greater transition.
In my medium size CA town, the Burger King just flat out closed. Other than long johns silver in the 1990s, I've never seen a major franchise just quit and close.
Any charts on numbers of gig employees? I see help wanted signs at fast food places all the time, but it may be that these workers are shifting to gig work.
As frustrating as it is as an employee to lose hours, customers are also frustrated by this as quality and speed are reduced. You have fewer employees being forced to perform the same quantity of work. Everything goes downhill and then people eat less fast food, causing the business to lose income and then reducing staffing and the cycle continues.
I avoid all fast food now except for Chick Filet not due to the food itself, which isn't great but just due to the terrible customer service I get everywhere else.
My kid asked me for McDonalds the other day and for once I said yes, we pulled in at 10:20am and ordered 3 chicken biscuits before breakfast ended at 10:30am. They of course asked us to park and after 15 minutes I went inside and asked what was going on. they apologized and said they were out of chicken as they got a rush when I ordered and it takes 7 minutes to cook. There were a grand total of 4 employees in the store sitting at a busy intersection with a double drive through line and an indoor eating area. Just utter lack of management and employees and customers pay the price.
its 10 minutes before breakfast ends, I'm pretty confident the same rush happens every day at that time. Just such a terrible experience. Definitely saying no next time my kids ask for McDonalds, its not worth 30 minutes of my life to drive through and order a chicken sandwich.
unemployed but at least they will live longer lol
Are they only looking at the fast food jobs?
Would that be incomplete? Higher minimum wage could cause higher employment in other sectors or raise their revenue and wages.
This is a critical point - economists call these "spillover effects" and they're often underexamined in minimum wage studies, as cross-elasticity between sectors can lead to employment shifts rather than net losses.