The Briefing Room
State Chapters => California => Topic started by: Wingnut on April 02, 2024, 03:31:13 pm
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and (for) the thousands of other fast-food workers put out of work by California’s law, it’s already too late. And these job losses reveal the truth of economist Thomas Sowell’s famous adage: The real minimum wage is $0.
For eight years, Michael Ojeda delivered food for a Pizza Hut in Ontario, California, using the income he received to support his family.
In December, the 29-year-old received a letter from the pizza franchise informing him that his employment was being terminated in February. The news shook him.
“Pizza Hut was my career for nearly a decade and with little to no notice it was taken away,” Ojeda said, whose story was recently highlighted by the Wall Street Journal.
Ojeda appears to be just one of the thousands of casualties of a new California law that will raise the minimum wage for fast-food workers to $20 an hour on April 1 for all restaurant chains that have at least 60 locations nationally.
Making $20 instead of $15 sounds like a win, but economics shows there’s no such thing as a free lunch. California lawmakers just proved it.
When the minimum wage goes up, the money to pay workers must come from somewhere, and it typically comes from three places: higher consumer prices, reduced labor costs in other areas (fewer workers, fewer hours, reduced benefits, etc.), and lower profits and capital expenditures.
Many minimum wage proponents want to focus just on that last item (profits) and ignore the other adverse consequences of the policy. But events unfolding in California show this is a mistake.
Restaurant franchises such as Chipotle, Jack in the Box, and McDonald’s have already announced they’ll be jacking up prices to cover increased labor costs, which are expected to increase by roughly $250,000 per location for many of these restaurants (though the economics here is nuanced).
But raising menu prices isn’t the only way California restaurants are responding. Records submitted to the state show Pizza Hut and Round Table Pizza plan to sack nearly 1,300 delivery drivers. Other chains are taking similar actions, and many restaurants have stopped hiring new workers.
This is not unexpected. Critics of the law predicted it would result in less employment, and that’s exactly what has happened.
https://fee.org/articles/the-results-of-californias-new-20-fast-food-minimum-wage-are-already-in/
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Some predictable - except to Prog pols, evidently - consequences:
* Lots of people losing their jobs;
* Front counter jobs reduced and replaced with order kiosks (this has been in process for a decade or more);
* Grill and fryolator jobs reduced and replaced with robots (this has been in process for a decade or more);
* Price increases (this can only partly compensate since customers will only tolerate so much, hence the above);
* Mom & Pops not covered by the law, YET, will have trouble getting good employees willing to accept a lower wage rate;
* Mom & Pops not covered by the law, YET, that are still successful will find this law a huge barrier to growth beyond a certain fairly small size (20 stores?) and against creating a franchise operation;
* Employees who are not laid off and don't have their hours reduced will have to work harder - stores will try to do what they had done with fewer employees - and will find rising prices, as this law's effects and extensions percolate through the economy, eating up their increased income.
A friend is a manager at a fast food chain store ("I can say no more."). Their store and the chain as a whole have been working for several months to figure out the combination of price increases, labor savings, and staff cutbacks/reductions that will let the store be profitable. He is not enjoying the process, especially since some of the people he works with and appreciates/loves will be hurt.
TANSTAAFL - There Ain't No Such Thing As A Free Lunch
I'm so old I remember when working at M or BK or TB or J in the B or ... was something high school kids did to buy gas and college kids did to buy food and gas and ...
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Workers at a Foster's Freeze in California showed up today expecting to earn a lot more per hour because Democrats passed a massive fast food minimum wage hike. Instead they got their last check. ...
https://twitter.com/SooperMexican/status/1775048026844971496
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I've done a whole lot of hard core factory and warehouse work for less that $20/hr, and recently.
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Workers at a Foster's Freeze in California showed up today expecting to earn a lot more per hour because Democrats passed a massive fast food minimum wage hike. Instead they got their last check. ...
https://twitter.com/SooperMexican/status/1775048026844971496
I think that happened in Lemoore, CA, which is south of Fresno and north of Bakersfield. A franchisee (Foster's Freeze is a regional chain) closing a store like this is walking away from a very large investment. The owner did not do this on a whim.
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It's not brain surgery folks -- who do you think is going to pay for the major hike in the minimum wage? Workers and patrons. The rise in food prices alone are hurting restaurants.
California minimum wage shocks fast food workers as restaurant closes: 'Only the beginning,' ex-manager warns
https://www.foxbusiness.com/economy/california-minimum-wage-shocks-fast-food-workers-restaurant-closes-only-begining-ex-manager-warns
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Some predictable - except to Prog pols, evidently - consequences:
...
* Mom & Pops not covered by the law, YET, will have trouble getting good employees willing to accept a lower wage rate;
...
Not quite Mom & Pops, but along similar lines:
California’s new $20-an-hour fast food minimum wage law poses headaches for school districts: ‘Harder to hire’
https://nypost.com/2024/04/04/business/californias-new-fast-food-minimum-wage-law-poses-headaches-for-school-districts/ (https://nypost.com/2024/04/04/business/californias-new-fast-food-minimum-wage-law-poses-headaches-for-school-districts/)
California’s new $20-an-hour minimum wage for fast food workers won’t just impact consumers who have to pay higher prices for menu items, but it could also make it more difficult for some public schools to retain low-paid cafeteria staffers.
Cash-strapped school districts in the Golden State could be forced to compete with billion-dollar corporations such as McDonald’s, Wendy’s and Pizza Hut parent company Yum! Brands for food service workers who are badly needed in California.