Beginning in 2024, California’s new minimum wage law passed by the Democrat legislature will go into effect. The new law sets the fast-food minimum wage at $20 an hour. That’s a pretty good place to start if you are a worker. However, what does it do to the bottom line of a company who is in business to make a profit (most companies are in business to make a profit)?<\/p>\n
On Thursday, Issues & Insights<\/a> posted an article detailing the impact the law, which will go into effect in April, has already had.<\/p>\n The article reports:<\/p>\n The state will raise its overall mandated minimum-wage rate from $16 an hour to $16.50 an hour overall, starting in 2024. But some industries will get an even bigger wage shock:\u00a0fast-food minimum wages<\/a>\u00a0go up to $20 an hour starting in April. Meanwhile,\u00a0workers in the health care industry<\/a>\u00a0will see their minimum wage rise to $18, $21 or $23 an hour, depending on the job.<\/strong><\/p>\n It\u2019s about time, you say?<\/strong><\/p>\n Let\u2019s start by saying we\u2019re not against anyone getting a raise. But raises should come from the companies themselves, not from government decrees. As study after study in recent years show, government-mandated minimum wage hikes usually hurt those they\u2019re meant to help.<\/strong><\/p>\n It\u2019s an irony that seems lost on California\u2019s leftist political class, now in total control of the state, continues to \u201chelp\u201d those at the bottom rungs of the economic ladder by making it more expensive for businesses to hire them and keep them working.<\/strong><\/p>\n Already, with California\u2019s looming minimum-wage tax on fast-food chains in the state, employers are tweaking costs by reducing hours, laying off workers and charging you more for that cheeseburger, fries and a drink that you crave.<\/strong><\/p>\n Though the calendar says it\u2019s still 2023, franchisees of the\u00a0Pizza Hut chain have announced<\/a>\u00a0this week they\u2019re laying off 1,200 drivers who used to deliver their piping-hot pies door-to-door. With the new higher wages, they can\u2019t afford to keep drivers working.<\/strong><\/p>\n The article points out some other consequences:<\/p>\n So who will suffer?<\/strong><\/p>\n \u201cEvery time we raise the minimum wage, kids lose their jobs,\u201d Ohanian explains. \u201cThis isn\u2019t efficient, and it isn\u2019t right. We should not be implementing policies that prevent people from being able to work.\u201d<\/strong><\/p>\n As for the argument that the hike is needed to \u201ckeep up with inflation,\u201d whose inflation are we talking about? Just the workers? How about the businesses? With three-quarters of their costs being labor-related, they have to take immediate action, or go out of business.<\/strong><\/p>\n And then there are the customers. They, not the businesses, will foot the bill when they buy a suddenly-much-pricier cheeseburger or a pizza. Prices will go up, as they inevitably do, when higher costs can\u2019t be offset by gains in productivity.<\/strong><\/p>\n For the curious, there are literally dozens of studies and reports out there (including our own<\/a>) that explode the myths of raising minimum wages, ranging from\u00a0Walter B. Williams\u2019 1977 landmark study<\/a>\u00a0for Congress that showed minority youths suffered most when minimum wages rise, to\u00a0more recent studies<\/a>\u00a0showing<\/a>\u00a0that non-wage losses after a minimum-wage hike offset any gains for workers.<\/strong><\/p>\n What will now happen, no doubt, is that there will be more\u00a0automation<\/a>\u00a0(robots already prepare food<\/a>\u00a0at McDonald\u2019s, Chipotle, White Castle, Panera and other outlets), more self-service terminals, and fewer workers overall.<\/strong><\/p>\n And, oh yes, stores will close. Marginal stores that can\u2019t make up the higher costs will simply shut down, thanks to inflation and higher wages.<\/strong><\/p>\n Sometimes when the government aims to help, it simply makes things worse for the people who are struggling to make ends meet already.<\/p>\n <\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Beginning in 2024, California’s new minimum wage law passed by the Democrat legislature will go into effect. The new law sets the fast-food minimum wage at $20 an hour. That’s a pretty good place to start if you are a … Continue reading