Some issues in life are troublesome. Predicting the adverse penalties of exorbitant and speedy minimum wage hikes isn’t one of them.
In 2023, California Gov. Gavin Newsom signed a $20-an-hour minimum wage regulation for fast-food employees. It went into impact in April 2024. For all employees, the minimum wage in California is $16.90 an hour.
This reform hasn’t fastened California’s cost-of-living points or stored folks from fleeing.
A working paper from the University of California, Santa Cruz appeared on the aftermath. The analysis, led by UC Santa Cruz economics lecturer Stephen Owen, discovered “many unintended consequences of this legislation.”
“The results indicate a plethora of negative outcomes such as higher menu prices for consumers, reductions in employee working hours, widespread elimination of overtime and loss of benefits for employees,” Owen and his staff famous. “Further decreases in employee opportunities are being driven by automation and the adoption of labor replacement technologies is accelerating.”
In different phrases, the plain penalties of artificially boosting employee pay past market charges got here to cross.
The greater labor prices led to “sector specific minimum wage with investments in new technology and automation.”
Computers don’t name in sick, and corporations don’t pay them by the hour. As the fee of labor will increase, automation makes extra monetary sense.
The paper particulars Chipotle’s use of “Cobots,” or collaborative robots. A possible “automated assembly line machine” might create the restaurant’s bowls and salads sooner or later. AI ordering affords additional alternatives to scale back headcount. This shift may create job alternatives for robotic repairmen, nevertheless it’s unlikely to assist a restaurant’s minimum-wage staff. They usually tend to have skilled a discount in hours labored.
In the meantime, the authors estimate that fast-food costs are up 8% to 12% since September 2023. In addition, “Franchise owners have seen profits decline, which will negatively impact their future investments to expand and create jobs,” the paper notes.
This regulation has harm staff, shoppers and enterprise house owners. Leftist demagogues specialise in lose-lose-lose insurance policies. Perhaps California voters are beginning to acknowledge that laws can’t bypass the legal guidelines of economics. In November 2024, California voters narrowly rejected an initiative that may have raised the minimum wage to $18 an hour.
Despite the failure of unrealistic minimum wage hikes, labor unions and leftist teams imagine they’ve discovered a sure-fire resolution. They need to increase the minimum wage to $30 an hour by 2030. Give them one other few a long time, and so they’ll be pushing a $90 minimum wage. Of course, that assumes there are any companies left in California.
Las Vegas Review-Journal/Tribune News Service
