Looking at California's $20 minimum wage impact 6 months later
California's fast food minimum wage rose to $20, showing stable employment and modest price increases. A study found wages up 18%, with ongoing hiring and closures linked to prior financial issues.
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Six months after California raised the minimum wage for fast food workers from $16 to $20 per hour, the anticipated negative impacts on employment and prices have not materialized as predicted by restaurant operators. A study from UC Berkeley's Center on Wage and Employment Dynamics found that while wages increased by 18%, employment levels remained stable, and menu prices rose only modestly by 3 to 7%. Anecdotal evidence from workers, such as Anneisha Williams, suggests that businesses are still hiring, contradicting claims of job losses. Despite some restaurant closures, experts argue that these were likely due to pre-existing financial issues rather than the wage increase itself. A July survey indicated that many fast food employers expected job cuts and price hikes, yet California's fast food job count actually increased by about 11,000 since the wage hike. The study suggests that fast food profit margins are sufficient to absorb higher wage costs. Looking ahead, the California Fast Food Council is considering further wage increases, and voters will soon decide on a proposition to raise the statewide minimum wage to $18.
- California's minimum wage for fast food workers increased to $20, with minimal impact on employment and only slight price increases.
- UC Berkeley's study shows wages up 18% and employment stable, countering restaurant operators' predictions.
- Anecdotal evidence from workers indicates ongoing hiring despite the wage increase.
- Some restaurant closures are attributed to pre-existing financial issues rather than the wage hike.
- Future wage increases are being considered, with a statewide minimum wage proposition on the ballot.
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8 comments> The study’s authors said that profit margins at fast food restaurants are relatively high compared to full service restaurants, companies have room to absorb higher wage costs.
This doesn't really look like companies absorbing higher wage costs. Labor is merely one expense in the cost of a good like fast food. You have managerial overhead, capital equipment, marketing, taxes, etc. Based on a quick googling, restaurants target a labor cost percentage of about 25-35% with fast food being skewed to the lower end. Then an 18% increase in the cost of labor passed directly to consumers would be a 4.5-6.3% increase in the total. This seems very much in line with the 3-7% observed.
[Edit] Looking at the actual paper, it's not a 3 to 7% price increase, it's 3.7% which they claim is 62% of the total cost increase. So they are using a cost of labor of 33%, while the price rise is equivalent to a cost of labor of 20% fully passed on. That's a much more defensible claim.
I’m truly sorry if I offend someone for whatever reason, but it is just wrong to have so many kids if one cannot financially support them well.
If you can figure out how to bring automation to small restaurants, they can compete. Until then, these changes just slowly close small restaurants over many years that are less efficient.
This seems like a gift to big corporations.
The big guy can take the hit from the raise.
It's the small guy who is affected the most.
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