California’s $20 Fast Food Minimum Wage Law Already Has Disastrous, Unintended Consequences
California is now leading the nation in imposing stupid wage laws.
The state just raised the minimum hourly wage for fast food workers to $20.
Governor Gavin Newsom said: “We saw the inequities… We had a responsibility to do more. »
Unions have pushed for a higher minimum, and in Democratic-led states, unions generally get what they want.
CNN announced: “Half a million California fast food workers will now earn $20 an hour. »
Gullible leftists at the Center for American Progress claim: “A higher minimum wage would lift millions of families out of poverty and further stimulate the economy. »
Hooray! It’s a happy cycle! Win-win.
But wait, if it’s a win-win, why just earn the $20 minimum? Why not $30? Or $100?
Because the government demanding higher wages is not a win-win.
Interfering with market prices always leads to unforeseen and unpleasant consequences.
Frédéric Bastiat, in his work “What is seen and what is not seen”, emphasizes that there are always visible and invisible consequences when government force influences economic decisions. “Almost always,” he writes, “the immediate consequence is favorable, the ultimate consequences are fatal. »
In this case, the immediate consequence is that existing workers get a raise. Great. This is the seen. This is what the media, the unions and the Center for American Progress see. But the invisible effect is more important, and worse:
No. 1: Thousands of Californians have already lost their jobs due to the closure of certain restaurants. Others lost income because their employer reduced working hours. The El Pollo Loco chain has reduced its employees’ working hours by 10 percent.
Pizza Hut announced it would lay off more than a thousand delivery drivers. One of them, Michael Ojeda, a delivery driver laid off by the company, naturally asked, “What’s the point of a raise if you don’t have a job?”
No. 2: Workers who still have jobs will lose them because now their employers have more incentive to automate. Chipotle just created a robot that makes burrito bowls. Even CNN admitted, “Some restaurants are replacing (fast food workers) with kiosks.”
No. 3: Prices are increasing.
The day Newsom signed the bill, he was asked, “Can Californians expect their McDonald’s and Starbucks prices to go up?”
Newsom responded misleadingly: “I’ve heard this rhetoric before. And that didn’t happen! »
Absurdity. It happened. This always happens when the government imposes wage increases. In this case, Starbucks’ prices increased by up to 15 percent. Customers will pay about $200 more per year for their coffee. A chicken burrito at Chipotle will cost up to 8% more.
No. 4: Perhaps the worst invisible harm of minimum wage laws is that young and unskilled people won’t even get hired. They won’t gain valuable experience from a first job at a fast food restaurant.
In 2014, when Seattle politicians raised the minimum wage to $15, I asked teenagers what a higher minimum wage could do for them.
“The minimum wage reduces my chances of finding a job,” Rigel Noble-Koza said. “If I cost more, why would a company take the risk of hiring me? They will hire the more experienced worker instead.”
Another, Dillon Hodes, spoke of his friend who had a fast-paced job but had her hours cut because “she was young and inexperienced.”
Of course, these students were unusual. They were finalists in the Stossel in the Classroom competition. They are not ignorant about economic matters. They knew how to look for the invisible.
If only politicians were that smart.
Government price-fixing, like minimum wage laws, harms young people and the poor, the very people these laws are supposed to help.
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California’s $20 Fast Food Minimum Wage Law Already Has Disastrous, Unintended Consequences appeared first on Reason.com.
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