On Tuesday, Breitbart posted an article about the impact of California’s increasing the minimum wage to $20 an hour.
The article reports:
California’s new $20-per-hour minimum wage for fast food workers has resulted in a significant decline in employment in that sector, leading to 18,000 fewer jobs than would have been the case otherwise.
That’s according to a new paper released by the National Bureau of Economic Research (NBER) this month, which said:
We analyze the effect of California’s $20 fast food minimum wage, which was enacted in September 2023 and went into effect in April 2024, on employment in the fast food sector. In unadjusted data from the Quarterly Census of Employment and Wages, we find that employment in California’s fast food sector declined by 2.7 percent relative to employment in the fast food sector elsewhere in the United States from September 2023 through September 2024. Adjusting for pre-AB 1228 trends increases this differential decline to 3.2 percent, while netting out the equivalent employment changes in non-minimum-wage-intensive industries further increases the decline. Our median estimate translates into a loss of 18,000 jobs in California’s fast food sector relative to the counterfactual.
The article concludes:
The Golden State currently has the highest unemployment rate in the U.S., though still relatively low at 5.4%.
Anyone with a basic understanding of business principles and economics would have seen this coming. Businesses are in business to make a profit. During the past four years, inflation has made it difficult for businesses to make a profit. The addition of a $20 per hour minimum wage created further challenges. The minimum wage is for employees entering the workforce and learning the basics–showing up on time, respecting authority, dressing appropriately, etc. If you are trying to support a family on a minimum-wage job, you need to find a way to increase your skill level. Setting a minimum wage of $20 not only decreases the number of employees a business can hire, it also puts an obstacle in the way of young people who want to enter the workforce.