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.
Similar patterns in Seattle, many once popular sit down restaurants are now empty and only serve as sources for delivery. Huge buildings with dozens of tables sit empty.
Wow here in Spain it's nothing like that. We still go out for dinner a few times a week (especially around lunch time when most restaurants have a 3-course menu for €12-14)
Seattle seems to have its own particular issues (somewhat shared by SF in my experience): there's no longer any compelling reason to go to downtown. There are plenty of reasons to avoid downtown. Restaurants in Woodinville seem very busy. Similarly restaurants in Sonoma are also very busy. I think the customers went elsewhere.
Online shopping has removed some proportion of the reason people would visit a city downtown. Remote working has removed some proportion of the reason people would be in a city downtown. There has to be some unreproducible draw to get people to go to a city: The Vatican/Mona Lisa; food and culture not available elsewhere, etc. Conversely the city has to be not a s.hole.
> 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.
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.
But on the other hand... Some people open cafes specifically because they dream of creating a place for the community to hang out. At least that's what they say. I often see McDonald's fill that niche for older folks.
> I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area
This is a common observation and should make more people ponder: why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
> why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
May I suggest the book Progress and Poverty by Henry George https://www.gutenberg.org/ebooks/55308 that asks almost the same question. The answer is that private land ownership allows landowners to capture economic growth of prosperous places, so wages barely cover rent at the margin. This is particularly relevant to California which passed a disastrous constitutional amendment Proposition 13 (1978) which slashed property taxes from around 2% to 1% and declining, especially for older estates, which is pretty much the opposite of the ideal policy to deal with the problem of rising rents.
I think two factors - high productivity leads to high cost of living, which means people without labor skills have a hard time making enough money for food and shelter.
But ALSO - these areas tend to lean towards higher levels of social services such that they have much higher homeless shelter / services / etc per capita.
So while many people may go homeless in place, certainly there is some homeless migration towards areas that actually provide food/shelter and don't harass/arrest them/chase them away.
I'd suggest high local wealth and economic productivity tend to correlate strongly with increased housing costs.
People move there for the jobs, and the ones who do have jobs tend to have relatively well paying ones, so can pay more for housing. But the ones who don't have a well paying job are in trouble...
I have an interesting observation about homelessness.
I live in a country where the average household makes about US$6000 a year.
The cost of living here is about 1/2 of the USA, with rents about 1/4. The unemployment rate is about 5%.
Homelessness is very, very low (to the point of near invisibility) and mostly limited to illegal immigrants.
The thing that seems to make homelessness a non-issue here is the tolerance of ad-hoc construction. This leads to neighbourhoods where construction is really low cost / quality, but people are housed.
I don’t really understand why these neighbourhoods don’t devolve into hotbeds of violent crime as I would expect them to in the USA, but they mostly don’t.
Mostly, the construction tends to improve over time, and the neighbourhoods often gradually metamorphosize into more contemporary and inviting areas with vibrant small businesses and elegant homes.
I often wonder if it’s cultural, as poverty is not seen as failure but rather a temporary condition to be transcended as possible?
You're swapping cause and effect. Places with lots of economic opportunity and significant public services to assist the homeless are the place where you can have large homeless populations, ie large numbers of people just barely scraping by. Decrease the money flowing in and the population will go down, because they would no longer be able to survive. Those who can will go elsewhere, you can imagine what happens to those who can't leave a place where they can't survive. One must be very careful using "number of people observed with a particular symptom of the problem" as a proxy for how well the problem is being handled.
Touch screens have been around for a long time. Just like the situation on the upper end with AI: I don't think it's the technology, people are actually getting worse at socializing (creating stress for the people responsible) and so socialization is becoming more expensive and opportunities for it are becoming more rare.
Often advocacy groups or municipalities will perform counts on specific days each year.
So while one does not need to say "literally" in that sentence (it wasn't figurative, after all), it is possible to say "zero homeless folks" as there may be data backing the statement up.
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.
Interestingly, minimum wage seems to be more likely in places with weak unions.
In places with strong unions, there is often a de facto, negotiated minimum at least on a sector by sector basis instead.
E.g. Norway has a roughly 50% unionisation rate, and no minimum wage in most situations, but most sectors are covered by negotiated agreements between the unions and employer organisations.
Where do we see a desperate race to the bottom? People leave if there's too much competition / low wages in an area. At least in America where the people are nomadic.
Viable alternatives are many when you look at minimum wage closely and see that it is, in essence, welfare funded by a regressive (even more so than usual) sales tax: businesses will pass most of it to their customers, and the fraction it in good or service sold is broadly inversely proportional to the price of that service. That is, people who buy the cheapest stuff - i.e. the poor - are those who are disproportionally taxed, as percentage of their overall spending. So it's taxing the poor to feed the poorest.
The obvious alternative is to tax the rich to feed the poorest. We can start with capital gains.
Most arguments for minimum wage solutions are better served by UBI-style solutions tied to having a job somewhere. People show up to work to benefit society in some way deemed valuable by someone who put a much larger investment in play (maybe tie to some really small minimum wage like $2/hour just to make sure the business owner really does deem the labor beneficial), but the vast majority of the worker's income comes from wealth transfers from the wealthy (via UBI) instead of from the working classes (who are the vast majority of clientele at places like McDonald's).
Prevent a desperate race to the bottom? Ensure something approaching a minimum wage? Nobody cares, so long as they're getting a UBI check from the government.
The price mechanisms of supply and demand are very well understood since the 1800s, and apply to anything that's bought and sold, including labor. 150 years of solid science.
When facts conflict with beliefs we hold dear and perhaps define our identities, our brains are very skilled at finding ways to keep believing what we want to believe.
Especially when the facts define your in-group. Changing such beliefs, makes you one of the people you and your friends hate. The mind will convince itself of pretty much anything to avoid such social suicide.
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.
Hate to boil this down to the basics, but I think it’s pertinent here. You’re comparing human beings working to survive to used vehicles. Even removing the complete lack of reckoning with basic humanity, the basis of your analogy is a ridiculous starting point to argue from. The value of an asset is not in any way analogous to the value of labor.
> You’re comparing human beings working to survive to used vehicles.
You could flip this and say "you're comparing people who are selling off an essential possession just to survive to a bit of company work."
The way people frame things in completely different ways to justify their preexisting beliefs is part of the reason why it's difficult to get people to consider other possibilities. The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. A person might just be getting rid of their used vehicle, or they might be giving up an essential possession because they're in dire straights.
It's a typical thinking of someone who read "Econ 101 for kiddies and libertarians" and never got the rest of education that explains all the ways those pronciples aren't as simple as descibed. And how people aren't interchangeable with cars.
Except that every company's wages is another company's revenue. Healthy consumer economies depend on consumers actually having disposable income, but this is becoming increasingly less and less true in the US.
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.
Well, employment and taxes are special because they can increase the propensity of people to spend. So, yes, they don't obey whatever idea of "supply and demand balance" uninformed people get from the news.
We absolutely do have laws that are the equivalent of “no one is allowed to sell their used car for less than X".
These laws take the form of transfer and registration fees for vehicles, taxes, and especially inspection requirements. We also have much stricter requirements on what a large commercial enterprise can sell versus a private individual.
We have rules like that for everything. We also say you can’t sell houses for less than X by mandating things like how many stairwells they have, and so on.
To the extent you’re tempted to argue some semantics about how you could still sell a car for a dollar you’re wrong and missing the point on purpose by arguing over the definitions in a way that doesn’t change the principle.
We do this because we are a society and we get to decide what the society looks like. Prices are downstream of our value system.
That's a terrible comparison. As a society we want cars to be cheap. A race to the bottom for cars is a good thing. The cheaper the better.
We do not want a race to the bottom for wages. If full time employment is not enough for basic necessities, that is the sort of thing that leads to riots. Society in general does not want that. Society prefers stability.
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
> 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 personally know a couple of Uber Eats restaurants whose only physical presence is literally a garage in a residential neighborhood, and they only take orders from the app. I also know of a Uber Eats competitor whose business model includes rider hubs that stock on a limited set of high volume products for quick delivery.
I wouldn't call them net loss of jobs per se. I see those as entirely different businesses with completely new business models. It's more a kin to ordering groceries online than to going on a night out.
I just can't understand McDonald's long term strategy. I can either go to them or to a locally owned burger place near me, and spend about the same. Waiting times are the same, and every other metric is worse at McDonald's. I went to McDonald's last week because I haven't been there for over a year and well, I won't be going for the next few years again. If they can't compete on price, speed or taste, they only compete on location and/or their current customer base. I just don't see how that is a viable long-term strategy.
McDonald's main value for me is consistency: it might not necessarily taste great, but it tastes roughly the same everywhere. There are better restaurants, but there is a greater probability of finding a McDonald's because it has more locations. McDonald's might not be the best choice, but it's usually a great fallback option if you are unfamiliar with the area.
I guess I'm a minority but when I generally dislike McDonald's but one of the reasons I continue to go there is because they often employee so many people from different demographics. It's been a redeeming quality trait of theirs. They give young people a start with work experience , 20-40s some managerial experience and sometimes elderly people a job too.
Once I'm just ordering a shitty burger from a machine, I have probably lost any reason to give them my money at all, there is just way better alternatives.
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.
This reminds me of the Sonic fast food chain. The first (and so far only) time I've visited Sonic was some years ago, I was staying at a motel across the street, walked over there to order, and was surprised there was no place to sit or even a normal counter to order at. The ads they run on TV give no indication that Sonic is strictly a drive-thru operation.
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.
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.
> I've noticed reduced hours, reduced staff, and increased prices
Anecdotally, this also describes how things have played out in the South generally. (Southern states generally have no set minimum wage, so they mostly default to the $7.25/hr set in 2009.) Perhaps this is different in other regions?
I have similarly stopped going to most "fast" food restaurants because the waits are interminable.
This is in states where an hour of minimum-wage labor will not gross you enough money to buy a pound of store-brand ground beef.
> since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices.
The problem with that line of reasoning is that in the meantime:
- unemployment has declined, which means it's harder to find people wanting to work in such a place.
- inflation has kicked in, raising prices over the board.
In that context, attributing the changes you've seen to a particular policy is very very hard (and the linked paper doesn't do a better job than what you do here…).
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.
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.
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.
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.
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.
> 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.
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.
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 issue with a minimum wage is there isn't a great economic theory for what it should be. So even if this one had good effects, it doesn't mean $25 per hour would also have positive effects. It's also possible a personally beneficial outcome was a net-negative.
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...
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.
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.
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.
That also goes for other fields as well. I've seen enough comments here on HN from people who thought their employer would offer them a Sillicon Valley wage if they moved to the middle of nowhere to live like royalty, often because they thought companies pay them based on how much value they add, especially when WFH became more widespread during COVID.
All companies pay people as little as they can to keep a certain amount of employees of certain quality around to do the work. The fewer options you have (or the more options your employer has), the worse the deal you'll have to accept becomes, and the lower your pay will be.
As for skills, I know plenty of people in IT who would go crazy working retail or interacting with customers within a month. Flipping burgers may be the easy part, but resilience against customer behaviour and monotonous/uninteresting work isn't something everyone has.
There is a huge difference in the quality of workers in fast food. Some people are slow. They are inefficient. They let things burn, they count change slowly, they are clumsy. They can't multi-task.
It is cognitively simple for you, because you aren't thick. But for people of well-below average intelligence, flipping burgers and doing something else at the time is just not possible.
> 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.
> 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.
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.
The marginal value being too low is just the company being bad at optimizing. Yes, contrary to fairy tales, companies are not so good at this because internal politics and/or poor management.
My country switched from 39 to 35 hours maximum working time per week, some years ago, in order to reduce unemployment (we are talking about around 25M workers). The net result was that companies did not hire more people (or less than expected), they figured out ways to make their working force more productive.
> This is disastrous for someone who'd love to work at $x/hour
This does not exist, period. If x is below the cost of housing and eating in the area, it's not worth working, or it is a last ditch job that delays dying on the streets - that's the reality we are talking about. I am pretty sure that the minimal wage they set is just above that, unless I missed the memo and California became socialist.
> The marginal value being too low is just the company being bad at optimizing.
not really.
If there's a job for cleaning the sidewalk of a joint, or for holding up a sign, but this marginal value is very low, then a minimum wage greater than this value will prevent this productive work from being done (or it'd be done by an existing worker, at the sacrifice of some other productive work they _could've_ done). There's no way to "optimize" this.
Personally i am not a fan of minimum wage. I rather have tax payer money spent on creating valuable workers through training. There's lots of models for such programs - for example, an apprenticeship model, where a firm pays for the cost of an apprenticeship (which includes wages as well as cost of training), in exchange for an agreed upon number of years of employment at an agreed upon fixed wage post-training (they cannot quit or will have to pay back the cost of training for example).
> 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 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
Living wage is a NIMBY problem, not a wage problem.
It's like thinking you can solve a GPU shortage by giving people more money to buy marked-up GPUs. That won't do anything except make GPUs even more expensive.
The solution is to build more GPUs. To build more housing.
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”.
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.
I find it weird how people care so much about employment overall rather than sufficient employment. Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government. Which is to say it's a job that shouldn't exist. While I don't think minimum wage is really the ideal mechanism of determining this, it's obvious that paying somebody federal minimum wage is an immoral exploitative joke... But also it'd likely be even worse without it.
But more to the point, why do these people obsessed with work and jobs always think anything that creates any kind of job is "good" no matter how bad, dangerous, or poorly compensated? Jobs that amount to licking poison for nickels in a country where you we could probably quarters the lowest currency denomination without issue somehow being "good" for the lockers is ludicrous. Low wages have massive negative externalities for society.
> Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government.
So should a teenager, just entering the workforce, should be paid enough to support a family?
I’d rather sacrifice a living wage for the opportunity of upward job mobility, that’s the metric I really care about. It’s not the job you start with that matters, it’s the job you end with, and how long it takes to get there.
I don't think people expect one income to support a family anymore. Two working parents has become the norm for all but the highest earners.
But yes, two teenagers may very well need to support a family. All it takes is one broken condom and being born in the wrong place at the wrong time.
There's not a lot of upward job mobility for most people. We can't all be CEOs. Even if that teenager has aspirations for a bigger career, they'll have expenses like college tuition, books, and travel.
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
Having lost a job suddenly, any employment is better than none. A perfect job that provides everything you need is pretty far detached from "this is sufficient", or even "this will slow my fall while I work something else out", and this kind of bitter resentment towards anything less than a job that pays out an idyllic American existence is what causes them to be priced out by legislative fiat like the minimum wage.
More to the point, not every skill level or job is _worth_ that kind of compensation (as uncomfortable as it might be to entertain), and attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages' -- which are as much a system of slavery as gravity or magnetism, and just as resilient to ideation.
> More to the point, not every skill level or job is _worth_ that kind of compensation ...
This is a fair stance to take, but you need to accept the consequences of the stance when people get desperate.
> attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages'
A population of people who can not feed themselves are going to kill you on the street for the canned tuna you might have in your bag.
> Having lost a job suddenly, any employment is better than none.
While this is true for you it is not true for the society as a whole.
This entire comment seems be written with a complete disrespect for macro dynamics and taken right out of a hunter gather society.
It completely ignores everything modern governance - and it is quite frightening.
I agree everything people might want done isn't worth the cost of having a human do it. But I don't see why such jobs should exist. I also don't think the base level of welfare needs to "idyllic," but enough for everyone to act as good citizens without being trapped in cursed doom cycles of impoverishment.
In general, though, it wouldn't matter what the minimum wage is if everyone had a sufficient level of general welfare without working...
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
You find it weird people don't want to starve? It may feel weird to you in your ivory towers but people still want to live no matter how demeaning their life gets.
Jobs are a product of the economy. In the end their prices (wages) move with market forces. The only way you deal with scarcity is by increasing supply (i.e. boosting industry), but alas there's always "intellectuals" like you sneering down on it as if people should just choose to die instead.
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.
> 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.
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.
Does that apply to all of the VC backed companies that are losing money? How many companies in CA that are paying minimum wage have the ability to be sustained for years by investors?
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.
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.
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.
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.”"
Well unions are not for profit so even if they funded a study they don't have as strong incentives to influence the study's outcome. That's different from when the study is founded by for profit entities. No?
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.
Is this true? I don't agree with the point of view of Seattle politicians but I've never seen even a hint of them acknowledging problems with their approach to anything. If anything the politics seems to be moving further left, after a very brief shift due to the truly disgusting state of the city during COVID.
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.
"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.
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.
Welfare is also kind of a subsidy for low paying employers.
If Walmart doesn’t pay enough for its employees to afford to live, then the government steps in with ebt and housing vouchers, etc. to make up the difference.
That’s money Walmart isn’t paying. In fact, they get to kind of double dip. As those employees will likely shop there. So the ebt gets spent there. The government essentially pays Walmart to feed its employees.
The employees are being double hit. Because their income is still taxed, then they essentially get scrip that they’ll likely have to spend at the place where they work.
It’s why you’ll also never see any real movement on the welfare issue. It’s a way to funnel tax money to the rich via poor people.
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.
I'm unsure you can make any conclusions here. The employment in the fast food industry went down, but we don't even know if it caused more unemployment. Those workers might have all found a better or similar paying job in another sector.
Without that information, there's nothing to learn here, exception those still employed in the fast food sector now make more money.
Yah. I mean, magically they are all CEOs now, kinda crazy, right at the same time minimum wage went up. The lord works in strange ways.
Really no. All you have to look at is the number of total jobs and now unfilled jobs. We don’t need to know about the people and them magically becoming CEOs.
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.
Ontario fast food minimum wage, $17.20. California’s $20. And the cost of living there is higher. Our fast food places, and whatever you call the next tier is doing just fine - the damn things are everywhere. Hard to find something that’s not some kind of chain. Probably a whole lot of takeaway or delivery, but things seem to meet society’s needs without decimating budgets. Maybe it’s a balance of having real workers and moderating profits for the longer term?
The vast majority of fast food workers in Ontario are foreigners working on visas.
And plenty of them are exploited and forced to kickback a part of their wages to the owner. The government does nothing and the owner gets below minimum wage workers.
While pitched as “helping people,” California’s fast-food minimum wage law has a different goal: reshaping the state’s tourism appeal. By making dining out feel more distinctive (and by nudging the market toward small restaurants and local chains) it’s a strategic play to make California a cooler place to visit and eat.
That’s how I’ve interpreted it - because otherwise, it makes little sense why the wage for the same work would vary based on the size of the company.
This is a side question, but, are people in California now not expected to pay the extortionary tips American businesses expect?
Whenever I pointed how backwards were the tipping expectations in the USA for anyone from Europe, the excuse was always that those tips would compensate the low wages paid in the food industry. Well, now that they have a standard minimum wage, are they doing away with the tipping practice?
Isn’t it fascinating if you raise the minimum wage some people say it destroys jobs but when people get fired because of things like robots and AI the same people claim it’s no problem because it those things that killed the jobs create just other jobs.
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.
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.
If a business can't provide a living wage, it shouldn't exist.
It's really that simple.
Imagine doing this analysis on the effects of requiring a business to pay it's slaves, and coming to the conclusion that some slave-based businesses would have to close, since their business model was so skewed, it could only function with slave labor...
Who cares! We don't want a world with companies that can only work with those kinds of business models!
Slave labor shouldn't subsidize artificially low priced products and artificially inflated executive salaries... the end.
Except that the study found California economy grew faster than states with low minimum wages. The law is actually necessary for growth. Conservative economists just lied, nobody thought this was actually going to cause unemployment.
One of the reasons why equality is so freaking important for a market economy is because it lets more people participate in it - equality is prerequisite for a market economy (and a democracy, but that is another discussion)
This is a crazy take. It’s not the company’s responsibility to provide a safety net. It’s the government’s and the government should collect taxes to do so.
We already have a system for this in theory - the Earned Income Tax Credit. The program use to be widely supported by both Democrats and Republican administrations.
What’s a “living wage” anyway? It’s not the same for a single mother of 3 as it was for my then teenage son.
And I find it rich for people on HN to say that companies that can’t afford to pay its workers are commenting on a site run by a VC fund where almost none of its companies could afford to pay anything if they weren’t being propped up by investors and most of the companies will never make a profit
There is no such thing as a living wage in a housing market like this. The recent bill in WA to control rents limited rental increases to the rate of inflation plus 7% (or a flat 10%, whichever is lower). So when inflation is at 3% every year, and rents rise 10% every year, how long before someone who gets a 5% annual raise (40% higher than the rate of inflation) can't afford rent?
As long as the rental market cannot meet rental demand, raising wages just bids up rents. No more people get housed or are able to create savings to weather emergencies. All that money just gets transferred from business owners to landlords, using minimum wage workers as mules to transport the money.
Your bias is demonstrated by the fact that you seem to think this is all about greedy business owners and you put ZERO responsibility on the landowners and politicians who have perpetuated this housing crisis.
Meanwhile, in states without property tax caps, overheated housing markets raise the property taxes of seniors until they can no longer afford their homes, even if they're paid off. My property taxes are still just a fraction of my mortgage but they've more than doubled in the past 8 years and in another 8 years I'll be 64 and likely pay more annually in property taxes than in mortgage payments.
So seniors and digital nomads sell their ridiculously overpriced homes in superheated markets and take those profits to cooler markets, increasing property values and property taxes, which may seem like a benefit until it heats up the local housing market too much.
But we saw Marc Andreessen and his wife demonstrate their nasty NIMBY values trying to stop a measure increasing housing density in Atherton, California a few years back. The same hero of VC who invested 9 figures in Adam Neumann's housing startup doesn't want any of the plebes it would serve within a bike ride of his home.
What's funny(in a sad way) is that there are arguments made regarding labor to pick crops saying we need migrants because local labor won't do the work for cheap and regarding manufacturing saying that cheap labor enables us to have a higher standard of living.
Is it really that simple though? Aren’t there cases where if those same people would otherwise be unemployed, society might be better off having the perks of that business’ existance, and subsidizing those workers up to a living wage using tax $?
It's absurd to see so many commenters, who are probably mostly wage earners, mindlessly repeat the right wing propaganda. Civilization needs some minimum decency.
Interesting perspective. I need a paragraphs worth of text translated once a week by a native speaker. Should my biz not exist or am I allowed to use "slave labor" fiverr?
Could it be that with a higher minimum wage, more people work these jobs full time, thus reducing the number of people employed part time? If the same number of hours are produced with a lower number of workers that should be a plausible explanation, yes?
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.
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 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.
As someone who kinda followed this debate for a while, I will point out that there is actually a large split down the middle of the on whether minimum wage increases decrease employment. And that split isn't actually due to ideological bias (which is the usual accusation), but rather methodology: almost all of the studies which confirm employment reductions use one methodology, and almost all of the studies which do not confirm employment loss use another methodology, and there is a large debate in econometrics as to how reasonable the assumptions are for each of the two methodologies.
One thing that always seems to be at a disconnect between the economic literature and policy makers is the economic context of the raise in wages. Even those economists that have bought in fully that minimum wage increases don't typically decrease employment will have several caveats to that statement, usually worded in the form of "small increases in the minimum wage". That is to say that there are often small inefficiencies in our current markets which allow employers to reduce wages in cartel-like fashion, and small increases in the minimum wage can claw some of that back in favor of the employees at the expense of employers' economic rents, but not at the expense of economic output. But large increases in the minimum wage absolutely can jump the shark, decreasing economic output by effectively making low margin sectors untenable entirely. If that weren't the case, we would be able to raise it infinitely without any negative effects, which is absolutely absurd (and unfortunately that is the takeaway that ideologues often get from reading abstracts).
A more useful economic model would go a step further than just saying "you can raise the minimum wage without harm to the economy", by incorporating econometric analysis which can accurately predict when and how much you can raise it without incurring economic harm.
Really, one can only truly understand the term "labour aristocracy" after reading this comment section. People show 0 solidarity towards people of their own class. The west is doomed.
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.
Why is the entire discussion between: "people should be able to pay rent and buy groceries and maybe save a little money on minimum wage" versus "those greedy poors"? I mean 10% of the US population are millionaires, we're all paying billionaires' taxes so they only have to pay a pittance, and soon we'll have a trillionaire. But no, screw the minimum wage workers, they should work extra jobs ... we'll never tax the rich what they owe, they are worshipped like gods.
Because if the minimum wage is too high, employers can't afford to pay it, so it will just result in reduced employment rather than wages going up, aka economic "deadweight loss".
That much is obvious. What is in question is the effects of more realistic minimum wages like this one. Some claim that _any_ minimum wage will only result in deadweight loss, which is true in simplified models, but the effect in the real world is not so clear, hence the need for this type of research.
Yes, I agree: this research shows that governments do a poor job when they attempt to set minimum wages, and they would do better to focus on accomplishing income redistribution policies through the tax code.
When government tries to set minimum wages, they often result in job losses (or foregone jobs that were never created) which, as you wrote, is known in economic circles as "deadweight loss."
It's not that people shouldn't have a minimum standard of living, it's whether we are going to take easy and ineffective routes to solve the problem that look good on paper and in commercials or whether we can have the adult discussion about the monetary system and how it affects citizens.
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.
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?
Similar patterns in Seattle, many once popular sit down restaurants are now empty and only serve as sources for delivery. Huge buildings with dozens of tables sit empty.
Wow here in Spain it's nothing like that. We still go out for dinner a few times a week (especially around lunch time when most restaurants have a 3-course menu for €12-14)
Seattle seems to have its own particular issues (somewhat shared by SF in my experience): there's no longer any compelling reason to go to downtown. There are plenty of reasons to avoid downtown. Restaurants in Woodinville seem very busy. Similarly restaurants in Sonoma are also very busy. I think the customers went elsewhere.
Online shopping has removed some proportion of the reason people would visit a city downtown. Remote working has removed some proportion of the reason people would be in a city downtown. There has to be some unreproducible draw to get people to go to a city: The Vatican/Mona Lisa; food and culture not available elsewhere, etc. Conversely the city has to be not a s.hole.
…the California minimum wage?
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I don't see that it did? The linked article is specific to CA data, it's not a broad survey.
It's in the second sentence
> 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.
Did it? I haven't looked into the data. The trends seem familiar where I live in the UK and the few places I've visited since the COVID incident.
I assume she's referring to the claim in the article.
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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.
But on the other hand... Some people open cafes specifically because they dream of creating a place for the community to hang out. At least that's what they say. I often see McDonald's fill that niche for older folks.
so is not opening a service based business
Yeh having to deal with actual customers is such a pain.
> I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area
This is a common observation and should make more people ponder: why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
> why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
May I suggest the book Progress and Poverty by Henry George https://www.gutenberg.org/ebooks/55308 that asks almost the same question. The answer is that private land ownership allows landowners to capture economic growth of prosperous places, so wages barely cover rent at the margin. This is particularly relevant to California which passed a disastrous constitutional amendment Proposition 13 (1978) which slashed property taxes from around 2% to 1% and declining, especially for older estates, which is pretty much the opposite of the ideal policy to deal with the problem of rising rents.
I think two factors - high productivity leads to high cost of living, which means people without labor skills have a hard time making enough money for food and shelter.
But ALSO - these areas tend to lean towards higher levels of social services such that they have much higher homeless shelter / services / etc per capita.
So while many people may go homeless in place, certainly there is some homeless migration towards areas that actually provide food/shelter and don't harass/arrest them/chase them away.
I'd suggest high local wealth and economic productivity tend to correlate strongly with increased housing costs.
People move there for the jobs, and the ones who do have jobs tend to have relatively well paying ones, so can pay more for housing. But the ones who don't have a well paying job are in trouble...
https://worksinprogress.co/issue/why-housing-shortages-cause...
1. Remote areas often have some kind of very cheap housing available. It may be low quality housing, but at least it's very affordable.
2. Remote areas don't have services that cater to homeless people.
I have an interesting observation about homelessness. I live in a country where the average household makes about US$6000 a year.
The cost of living here is about 1/2 of the USA, with rents about 1/4. The unemployment rate is about 5%.
Homelessness is very, very low (to the point of near invisibility) and mostly limited to illegal immigrants.
The thing that seems to make homelessness a non-issue here is the tolerance of ad-hoc construction. This leads to neighbourhoods where construction is really low cost / quality, but people are housed.
I don’t really understand why these neighbourhoods don’t devolve into hotbeds of violent crime as I would expect them to in the USA, but they mostly don’t.
Mostly, the construction tends to improve over time, and the neighbourhoods often gradually metamorphosize into more contemporary and inviting areas with vibrant small businesses and elegant homes.
I often wonder if it’s cultural, as poverty is not seen as failure but rather a temporary condition to be transcended as possible?
You're swapping cause and effect. Places with lots of economic opportunity and significant public services to assist the homeless are the place where you can have large homeless populations, ie large numbers of people just barely scraping by. Decrease the money flowing in and the population will go down, because they would no longer be able to survive. Those who can will go elsewhere, you can imagine what happens to those who can't leave a place where they can't survive. One must be very careful using "number of people observed with a particular symptom of the problem" as a proxy for how well the problem is being handled.
Because the wealth isn’t distributed properly. Fairly obvious I’d say.
Correlation is not causation. One does not increase the other, rather the rise in one is correlated with the other.
Touch screens have been around for a long time. Just like the situation on the upper end with AI: I don't think it's the technology, people are actually getting worse at socializing (creating stress for the people responsible) and so socialization is becoming more expensive and opportunities for it are becoming more rare.
This could get a lot worse before it gets better.
McDonalds broadly rolled out touchscreen ordering after covid became a thing. That’s why it gets called out in these discussions.
How do you know there are "literally zero homeless folks" in your area?
Often advocacy groups or municipalities will perform counts on specific days each year.
So while one does not need to say "literally" in that sentence (it wasn't figurative, after all), it is possible to say "zero homeless folks" as there may be data backing the statement up.
(Deleted because misplaced)
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.
Interestingly, minimum wage seems to be more likely in places with weak unions.
In places with strong unions, there is often a de facto, negotiated minimum at least on a sector by sector basis instead.
E.g. Norway has a roughly 50% unionisation rate, and no minimum wage in most situations, but most sectors are covered by negotiated agreements between the unions and employer organisations.
Real question: If government-mandated wages are good policy, why not set the minimum wage to $100/hr?
(Btw, the American healthcare system is about as far away from a free market as it gets. Don’t think that example supports your point.)
Where do we see a desperate race to the bottom? People leave if there's too much competition / low wages in an area. At least in America where the people are nomadic.
Viable alternatives are many when you look at minimum wage closely and see that it is, in essence, welfare funded by a regressive (even more so than usual) sales tax: businesses will pass most of it to their customers, and the fraction it in good or service sold is broadly inversely proportional to the price of that service. That is, people who buy the cheapest stuff - i.e. the poor - are those who are disproportionally taxed, as percentage of their overall spending. So it's taxing the poor to feed the poorest.
The obvious alternative is to tax the rich to feed the poorest. We can start with capital gains.
Most arguments for minimum wage solutions are better served by UBI-style solutions tied to having a job somewhere. People show up to work to benefit society in some way deemed valuable by someone who put a much larger investment in play (maybe tie to some really small minimum wage like $2/hour just to make sure the business owner really does deem the labor beneficial), but the vast majority of the worker's income comes from wealth transfers from the wealthy (via UBI) instead of from the working classes (who are the vast majority of clientele at places like McDonald's).
Prevent a desperate race to the bottom? Ensure something approaching a minimum wage? Nobody cares, so long as they're getting a UBI check from the government.
> viable alternatives are scant.
Not really? Other countries do industry-wide union agreements that apply to the whole sector, seems to work well enough for them.
The price mechanisms of supply and demand are very well understood since the 1800s, and apply to anything that's bought and sold, including labor. 150 years of solid science.
When facts conflict with beliefs we hold dear and perhaps define our identities, our brains are very skilled at finding ways to keep believing what we want to believe.
Especially when the facts define your in-group. Changing such beliefs, makes you one of the people you and your friends hate. The mind will convince itself of pretty much anything to avoid such social suicide.
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.
Hate to boil this down to the basics, but I think it’s pertinent here. You’re comparing human beings working to survive to used vehicles. Even removing the complete lack of reckoning with basic humanity, the basis of your analogy is a ridiculous starting point to argue from. The value of an asset is not in any way analogous to the value of labor.
> You’re comparing human beings working to survive to used vehicles.
You could flip this and say "you're comparing people who are selling off an essential possession just to survive to a bit of company work."
The way people frame things in completely different ways to justify their preexisting beliefs is part of the reason why it's difficult to get people to consider other possibilities. The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. A person might just be getting rid of their used vehicle, or they might be giving up an essential possession because they're in dire straights.
Injecting appeal to emotion is almost universally a sign of a weak argument, especially when it comes to thinly veiled labor theory of value angles.
It's a typical thinking of someone who read "Econ 101 for kiddies and libertarians" and never got the rest of education that explains all the ways those pronciples aren't as simple as descibed. And how people aren't interchangeable with cars.
Except that every company's wages is another company's revenue. Healthy consumer economies depend on consumers actually having disposable income, but this is becoming increasingly less and less true in the US.
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.
Well, employment and taxes are special because they can increase the propensity of people to spend. So, yes, they don't obey whatever idea of "supply and demand balance" uninformed people get from the news.
We absolutely do have laws that are the equivalent of “no one is allowed to sell their used car for less than X".
These laws take the form of transfer and registration fees for vehicles, taxes, and especially inspection requirements. We also have much stricter requirements on what a large commercial enterprise can sell versus a private individual.
We have rules like that for everything. We also say you can’t sell houses for less than X by mandating things like how many stairwells they have, and so on.
To the extent you’re tempted to argue some semantics about how you could still sell a car for a dollar you’re wrong and missing the point on purpose by arguing over the definitions in a way that doesn’t change the principle.
We do this because we are a society and we get to decide what the society looks like. Prices are downstream of our value system.
That's a terrible comparison. As a society we want cars to be cheap. A race to the bottom for cars is a good thing. The cheaper the better.
We do not want a race to the bottom for wages. If full time employment is not enough for basic necessities, that is the sort of thing that leads to riots. Society in general does not want that. Society prefers stability.
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
> 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 personally know a couple of Uber Eats restaurants whose only physical presence is literally a garage in a residential neighborhood, and they only take orders from the app. I also know of a Uber Eats competitor whose business model includes rider hubs that stock on a limited set of high volume products for quick delivery.
I wouldn't call them net loss of jobs per se. I see those as entirely different businesses with completely new business models. It's more a kin to ordering groceries online than to going on a night out.
I just can't understand McDonald's long term strategy. I can either go to them or to a locally owned burger place near me, and spend about the same. Waiting times are the same, and every other metric is worse at McDonald's. I went to McDonald's last week because I haven't been there for over a year and well, I won't be going for the next few years again. If they can't compete on price, speed or taste, they only compete on location and/or their current customer base. I just don't see how that is a viable long-term strategy.
McDonald's main value for me is consistency: it might not necessarily taste great, but it tastes roughly the same everywhere. There are better restaurants, but there is a greater probability of finding a McDonald's because it has more locations. McDonald's might not be the best choice, but it's usually a great fallback option if you are unfamiliar with the area.
I haven't been to a McDonald's in over a year, but back then at least app had insane deals that blew away anything else.
I guess I'm a minority but when I generally dislike McDonald's but one of the reasons I continue to go there is because they often employee so many people from different demographics. It's been a redeeming quality trait of theirs. They give young people a start with work experience , 20-40s some managerial experience and sometimes elderly people a job too.
Once I'm just ordering a shitty burger from a machine, I have probably lost any reason to give them my money at all, there is just way better alternatives.
A net loss in fast food jobs doesn’t mean net loss over all.
More money in low wage jobs is mostly spend and not saved and can lead to more jobs in other sectors.
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.
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.
At home in front of the television while scrolling their phone
This reminds me of the Sonic fast food chain. The first (and so far only) time I've visited Sonic was some years ago, I was staying at a motel across the street, walked over there to order, and was surprised there was no place to sit or even a normal counter to order at. The ads they run on TV give no indication that Sonic is strictly a drive-thru operation.
" ongoing issues with the local homeless population"
This is the REAL issue.
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.
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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.
> 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.
> I've noticed reduced hours, reduced staff, and increased prices
Anecdotally, this also describes how things have played out in the South generally. (Southern states generally have no set minimum wage, so they mostly default to the $7.25/hr set in 2009.) Perhaps this is different in other regions?
I have similarly stopped going to most "fast" food restaurants because the waits are interminable.
This is in states where an hour of minimum-wage labor will not gross you enough money to buy a pound of store-brand ground beef.
It's not the wage.
> since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices.
The problem with that line of reasoning is that in the meantime:
- unemployment has declined, which means it's harder to find people wanting to work in such a place.
- inflation has kicked in, raising prices over the board.
In that context, attributing the changes you've seen to a particular policy is very very hard (and the linked paper doesn't do a better job than what you do here…).
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.
Was your normal breakfast spot subject to AB 1228 regulations?
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This only makes sense if staffing is a major cost factor, which it isn't.
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.
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'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.
Also consider non linear utility of money.
They are working the same hours elsewhere for free?
Why not set very low maximum wage ceilings and have 100% employment? /s
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.
One possible reason: People don't need a second job anymore.
> 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.
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.
What about all the people who are now priced-out from working at all because it is not economic for the business to employ them at these rates?
That was the original intent of minimum wages!
https://mises.org/mises-wire/racist-history-minimum-wage-law...
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 issue with a minimum wage is there isn't a great economic theory for what it should be. So even if this one had good effects, it doesn't mean $25 per hour would also have positive effects. It's also possible a personally beneficial outcome was a net-negative.
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...
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++
Maybe a good trade if it was just a loss of employment. But there are other downsides...like fewer hours and higher prices.
> overall sounds like a big success?
It depends on how many hours were worked. Which the paper did not measure.
Squid Games, in a nutshell.
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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.
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.
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.
That also goes for other fields as well. I've seen enough comments here on HN from people who thought their employer would offer them a Sillicon Valley wage if they moved to the middle of nowhere to live like royalty, often because they thought companies pay them based on how much value they add, especially when WFH became more widespread during COVID.
All companies pay people as little as they can to keep a certain amount of employees of certain quality around to do the work. The fewer options you have (or the more options your employer has), the worse the deal you'll have to accept becomes, and the lower your pay will be.
As for skills, I know plenty of people in IT who would go crazy working retail or interacting with customers within a month. Flipping burgers may be the easy part, but resilience against customer behaviour and monotonous/uninteresting work isn't something everyone has.
There is a huge difference in the quality of workers in fast food. Some people are slow. They are inefficient. They let things burn, they count change slowly, they are clumsy. They can't multi-task.
It is cognitively simple for you, because you aren't thick. But for people of well-below average intelligence, flipping burgers and doing something else at the time is just not possible.
> 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.
The 18,000 people who lost their jobs may disagree.
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-...
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.
The marginal value being too low is just the company being bad at optimizing. Yes, contrary to fairy tales, companies are not so good at this because internal politics and/or poor management.
My country switched from 39 to 35 hours maximum working time per week, some years ago, in order to reduce unemployment (we are talking about around 25M workers). The net result was that companies did not hire more people (or less than expected), they figured out ways to make their working force more productive.
> This is disastrous for someone who'd love to work at $x/hour
This does not exist, period. If x is below the cost of housing and eating in the area, it's not worth working, or it is a last ditch job that delays dying on the streets - that's the reality we are talking about. I am pretty sure that the minimal wage they set is just above that, unless I missed the memo and California became socialist.
> The marginal value being too low is just the company being bad at optimizing.
not really.
If there's a job for cleaning the sidewalk of a joint, or for holding up a sign, but this marginal value is very low, then a minimum wage greater than this value will prevent this productive work from being done (or it'd be done by an existing worker, at the sacrifice of some other productive work they _could've_ done). There's no way to "optimize" this.
Personally i am not a fan of minimum wage. I rather have tax payer money spent on creating valuable workers through training. There's lots of models for such programs - for example, an apprenticeship model, where a firm pays for the cost of an apprenticeship (which includes wages as well as cost of training), in exchange for an agreed upon number of years of employment at an agreed upon fixed wage post-training (they cannot quit or will have to pay back the cost of training for example).
> 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 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
Living wage is a NIMBY problem, not a wage problem.
It's like thinking you can solve a GPU shortage by giving people more money to buy marked-up GPUs. That won't do anything except make GPUs even more expensive.
The solution is to build more GPUs. To build more housing.
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”.
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.
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"
I find it weird how people care so much about employment overall rather than sufficient employment. Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government. Which is to say it's a job that shouldn't exist. While I don't think minimum wage is really the ideal mechanism of determining this, it's obvious that paying somebody federal minimum wage is an immoral exploitative joke... But also it'd likely be even worse without it.
But more to the point, why do these people obsessed with work and jobs always think anything that creates any kind of job is "good" no matter how bad, dangerous, or poorly compensated? Jobs that amount to licking poison for nickels in a country where you we could probably quarters the lowest currency denomination without issue somehow being "good" for the lockers is ludicrous. Low wages have massive negative externalities for society.
> Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government.
So should a teenager, just entering the workforce, should be paid enough to support a family?
I’d rather sacrifice a living wage for the opportunity of upward job mobility, that’s the metric I really care about. It’s not the job you start with that matters, it’s the job you end with, and how long it takes to get there.
I don't think people expect one income to support a family anymore. Two working parents has become the norm for all but the highest earners.
But yes, two teenagers may very well need to support a family. All it takes is one broken condom and being born in the wrong place at the wrong time.
There's not a lot of upward job mobility for most people. We can't all be CEOs. Even if that teenager has aspirations for a bigger career, they'll have expenses like college tuition, books, and travel.
>Low wages have massive negative externalities for society.
The alternative to low wages isn't necessarily high wages. It could also be zero wages, as the study in the OP demonstrates.
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
Having lost a job suddenly, any employment is better than none. A perfect job that provides everything you need is pretty far detached from "this is sufficient", or even "this will slow my fall while I work something else out", and this kind of bitter resentment towards anything less than a job that pays out an idyllic American existence is what causes them to be priced out by legislative fiat like the minimum wage.
More to the point, not every skill level or job is _worth_ that kind of compensation (as uncomfortable as it might be to entertain), and attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages' -- which are as much a system of slavery as gravity or magnetism, and just as resilient to ideation.
> More to the point, not every skill level or job is _worth_ that kind of compensation ...
This is a fair stance to take, but you need to accept the consequences of the stance when people get desperate.
> attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages'
A population of people who can not feed themselves are going to kill you on the street for the canned tuna you might have in your bag.
> Having lost a job suddenly, any employment is better than none.
While this is true for you it is not true for the society as a whole.
This entire comment seems be written with a complete disrespect for macro dynamics and taken right out of a hunter gather society.
It completely ignores everything modern governance - and it is quite frightening.
I agree everything people might want done isn't worth the cost of having a human do it. But I don't see why such jobs should exist. I also don't think the base level of welfare needs to "idyllic," but enough for everyone to act as good citizens without being trapped in cursed doom cycles of impoverishment.
In general, though, it wouldn't matter what the minimum wage is if everyone had a sufficient level of general welfare without working...
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
You find it weird people don't want to starve? It may feel weird to you in your ivory towers but people still want to live no matter how demeaning their life gets.
Jobs are a product of the economy. In the end their prices (wages) move with market forces. The only way you deal with scarcity is by increasing supply (i.e. boosting industry), but alas there's always "intellectuals" like you sneering down on it as if people should just choose to die instead.
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.
> 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.
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.
Does that apply to all of the VC backed companies that are losing money? How many companies in CA that are paying minimum wage have the ability to be sustained for years by investors?
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.
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.
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.
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...
In contrast the study that's linked by OP is funded by:
Amazon, giant banks, ExxonMobile, Google, Microsoft, investment firms.
https://www.nber.org/about-nber/support-funding
Well unions are not for profit so even if they funded a study they don't have as strong incentives to influence the study's outcome. That's different from when the study is founded by for profit entities. No?
You have made a good case for a close reading of the study. Are they wrong? Is the methodology bad?
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.
Is this true? I don't agree with the point of view of Seattle politicians but I've never seen even a hint of them acknowledging problems with their approach to anything. If anything the politics seems to be moving further left, after a very brief shift due to the truly disgusting state of the city during COVID.
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.
"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?
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.
Welfare is also kind of a subsidy for low paying employers.
If Walmart doesn’t pay enough for its employees to afford to live, then the government steps in with ebt and housing vouchers, etc. to make up the difference.
That’s money Walmart isn’t paying. In fact, they get to kind of double dip. As those employees will likely shop there. So the ebt gets spent there. The government essentially pays Walmart to feed its employees.
The employees are being double hit. Because their income is still taxed, then they essentially get scrip that they’ll likely have to spend at the place where they work.
It’s why you’ll also never see any real movement on the welfare issue. It’s a way to funnel tax money to the rich via poor people.
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.
> a few will fire someone
> all employees win
I'm unsure you can make any conclusions here. The employment in the fast food industry went down, but we don't even know if it caused more unemployment. Those workers might have all found a better or similar paying job in another sector.
Without that information, there's nothing to learn here, exception those still employed in the fast food sector now make more money.
Yah. I mean, magically they are all CEOs now, kinda crazy, right at the same time minimum wage went up. The lord works in strange ways.
Really no. All you have to look at is the number of total jobs and now unfilled jobs. We don’t need to know about the people and them magically becoming CEOs.
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.
Ontario fast food minimum wage, $17.20. California’s $20. And the cost of living there is higher. Our fast food places, and whatever you call the next tier is doing just fine - the damn things are everywhere. Hard to find something that’s not some kind of chain. Probably a whole lot of takeaway or delivery, but things seem to meet society’s needs without decimating budgets. Maybe it’s a balance of having real workers and moderating profits for the longer term?
The vast majority of fast food workers in Ontario are foreigners working on visas.
And plenty of them are exploited and forced to kickback a part of their wages to the owner. The government does nothing and the owner gets below minimum wage workers.
It’s shockingly common in Canada.
You see this in other countries as well. They pay decent wages to fast food employees and don’t play the tipping game either.
Prices aren’t out of control and service is decent.
While pitched as “helping people,” California’s fast-food minimum wage law has a different goal: reshaping the state’s tourism appeal. By making dining out feel more distinctive (and by nudging the market toward small restaurants and local chains) it’s a strategic play to make California a cooler place to visit and eat.
That’s how I’ve interpreted it - because otherwise, it makes little sense why the wage for the same work would vary based on the size of the company.
You're giving way too much credit to the emergent intelligence of the CA legislature
This is a side question, but, are people in California now not expected to pay the extortionary tips American businesses expect?
Whenever I pointed how backwards were the tipping expectations in the USA for anyone from Europe, the excuse was always that those tips would compensate the low wages paid in the food industry. Well, now that they have a standard minimum wage, are they doing away with the tipping practice?
As restaurants are replaced with robotics there will be severe job losses to this sector. Temporary measures cannot alter the greater transition.
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Isn’t it fascinating if you raise the minimum wage some people say it destroys jobs but when people get fired because of things like robots and AI the same people claim it’s no problem because it those things that killed the jobs create just other jobs.
More money to spend also creates jobs
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.
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.
If a business can't provide a living wage, it shouldn't exist. It's really that simple.
Imagine doing this analysis on the effects of requiring a business to pay it's slaves, and coming to the conclusion that some slave-based businesses would have to close, since their business model was so skewed, it could only function with slave labor...
Who cares! We don't want a world with companies that can only work with those kinds of business models!
Slave labor shouldn't subsidize artificially low priced products and artificially inflated executive salaries... the end.
Except that the study found California economy grew faster than states with low minimum wages. The law is actually necessary for growth. Conservative economists just lied, nobody thought this was actually going to cause unemployment.
This is the message.
One of the reasons why equality is so freaking important for a market economy is because it lets more people participate in it - equality is prerequisite for a market economy (and a democracy, but that is another discussion)
This is a crazy take. It’s not the company’s responsibility to provide a safety net. It’s the government’s and the government should collect taxes to do so.
We already have a system for this in theory - the Earned Income Tax Credit. The program use to be widely supported by both Democrats and Republican administrations.
What’s a “living wage” anyway? It’s not the same for a single mother of 3 as it was for my then teenage son.
And I find it rich for people on HN to say that companies that can’t afford to pay its workers are commenting on a site run by a VC fund where almost none of its companies could afford to pay anything if they weren’t being propped up by investors and most of the companies will never make a profit
You're a tool... of landlord propaganda.
There is no such thing as a living wage in a housing market like this. The recent bill in WA to control rents limited rental increases to the rate of inflation plus 7% (or a flat 10%, whichever is lower). So when inflation is at 3% every year, and rents rise 10% every year, how long before someone who gets a 5% annual raise (40% higher than the rate of inflation) can't afford rent?
As long as the rental market cannot meet rental demand, raising wages just bids up rents. No more people get housed or are able to create savings to weather emergencies. All that money just gets transferred from business owners to landlords, using minimum wage workers as mules to transport the money.
Your bias is demonstrated by the fact that you seem to think this is all about greedy business owners and you put ZERO responsibility on the landowners and politicians who have perpetuated this housing crisis.
Meanwhile, in states without property tax caps, overheated housing markets raise the property taxes of seniors until they can no longer afford their homes, even if they're paid off. My property taxes are still just a fraction of my mortgage but they've more than doubled in the past 8 years and in another 8 years I'll be 64 and likely pay more annually in property taxes than in mortgage payments.
So seniors and digital nomads sell their ridiculously overpriced homes in superheated markets and take those profits to cooler markets, increasing property values and property taxes, which may seem like a benefit until it heats up the local housing market too much.
But we saw Marc Andreessen and his wife demonstrate their nasty NIMBY values trying to stop a measure increasing housing density in Atherton, California a few years back. The same hero of VC who invested 9 figures in Adam Neumann's housing startup doesn't want any of the plebes it would serve within a bike ride of his home.
What's funny(in a sad way) is that there are arguments made regarding labor to pick crops saying we need migrants because local labor won't do the work for cheap and regarding manufacturing saying that cheap labor enables us to have a higher standard of living.
Is it really that simple though? Aren’t there cases where if those same people would otherwise be unemployed, society might be better off having the perks of that business’ existance, and subsidizing those workers up to a living wage using tax $?
Thank you for stating this so simply and clearly.
It's absurd to see so many commenters, who are probably mostly wage earners, mindlessly repeat the right wing propaganda. Civilization needs some minimum decency.
Interesting perspective. I need a paragraphs worth of text translated once a week by a native speaker. Should my biz not exist or am I allowed to use "slave labor" fiverr?
Could it be that with a higher minimum wage, more people work these jobs full time, thus reducing the number of people employed part time? If the same number of hours are produced with a lower number of workers that should be a plausible explanation, yes?
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.
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 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.
As someone who kinda followed this debate for a while, I will point out that there is actually a large split down the middle of the on whether minimum wage increases decrease employment. And that split isn't actually due to ideological bias (which is the usual accusation), but rather methodology: almost all of the studies which confirm employment reductions use one methodology, and almost all of the studies which do not confirm employment loss use another methodology, and there is a large debate in econometrics as to how reasonable the assumptions are for each of the two methodologies.
One thing that always seems to be at a disconnect between the economic literature and policy makers is the economic context of the raise in wages. Even those economists that have bought in fully that minimum wage increases don't typically decrease employment will have several caveats to that statement, usually worded in the form of "small increases in the minimum wage". That is to say that there are often small inefficiencies in our current markets which allow employers to reduce wages in cartel-like fashion, and small increases in the minimum wage can claw some of that back in favor of the employees at the expense of employers' economic rents, but not at the expense of economic output. But large increases in the minimum wage absolutely can jump the shark, decreasing economic output by effectively making low margin sectors untenable entirely. If that weren't the case, we would be able to raise it infinitely without any negative effects, which is absolutely absurd (and unfortunately that is the takeaway that ideologues often get from reading abstracts).
A more useful economic model would go a step further than just saying "you can raise the minimum wage without harm to the economy", by incorporating econometric analysis which can accurately predict when and how much you can raise it without incurring economic harm.
Betteridge's law of headlines: https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
Really, one can only truly understand the term "labour aristocracy" after reading this comment section. People show 0 solidarity towards people of their own class. The west is doomed.
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.
Why is the entire discussion between: "people should be able to pay rent and buy groceries and maybe save a little money on minimum wage" versus "those greedy poors"? I mean 10% of the US population are millionaires, we're all paying billionaires' taxes so they only have to pay a pittance, and soon we'll have a trillionaire. But no, screw the minimum wage workers, they should work extra jobs ... we'll never tax the rich what they owe, they are worshipped like gods.
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unemployed but at least they will live longer lol
I'm a tax evader haha
Real question: If government-mandated wages are good policy, why not set the minimum wage to $50/hr?
Why not $100/hr?
Because if the minimum wage is too high, employers can't afford to pay it, so it will just result in reduced employment rather than wages going up, aka economic "deadweight loss".
That much is obvious. What is in question is the effects of more realistic minimum wages like this one. Some claim that _any_ minimum wage will only result in deadweight loss, which is true in simplified models, but the effect in the real world is not so clear, hence the need for this type of research.
Yes, I agree: this research shows that governments do a poor job when they attempt to set minimum wages, and they would do better to focus on accomplishing income redistribution policies through the tax code.
When government tries to set minimum wages, they often result in job losses (or foregone jobs that were never created) which, as you wrote, is known in economic circles as "deadweight loss."
It's not that people shouldn't have a minimum standard of living, it's whether we are going to take easy and ineffective routes to solve the problem that look good on paper and in commercials or whether we can have the adult discussion about the monetary system and how it affects citizens.
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.
> 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.
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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.