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?
sokoloff · 4h ago
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.
MLR · 4h ago
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.
roenxi · 3h ago
> 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.
That seems unlikely to be just that though, this study was just on the people who lost jobs. If 20,000 people are out of a job, there is probably another larger cohort on less hours. And we also don't know how much wages rose. The people who were fired were the ones who could only justify being paid the minimum. The ones who stayed might already have been paid more like $17, $18 or $19/hr.
So yes to what you say, but the study doesn't say anything about whether total compensation went up or down.
tialaramex · 4h ago
Also low minimum wages are actually just corporate welfare.
The gap between what a minimum wage job pays and what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die, which means the jobs don't get done, so that means the resource spent by governments or charities as a result of a low minimum wage is a subsidy for the employer. Instead of paying what it costs they get it for cheaper to create a fiction of "employment".
delusional · 4h ago
> I agree that a lost job should carry some kind of premium compared to a total increase in wages paid
I don't think it's nearly that clear. Western nations are at a near record low unemployment rate. We should want to remove low paying jobs.
roenxi · 4h ago
But that was the best job they could find. Presumably those people are going to be unemployed now. I mean, maybe they're kids and their families will have enough slack to just adsorb the change but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr. So it actually costs the broader economy more than the salary they lost - firstly the work they were doing isn't being done, secondly someone else now has to work to earn the keep of the person who was just laid off because the job that paid them around what their skills were worth just got regulated out of existence.
ItsMonkk · 47m ago
The abstract states that there are 2.7% less fast food jobs, not 2.7% less jobs. There might be 2.7% less fast food restaurants as a result of this change, but in their place will be other businesses that employ people of higher than minimum wage. Those businesses might hire the best fast food workers while the average fast food worker continues to be employed doing fast food. As a result, there may be no people who have now become unemployed as a result of this change, and only increases in wages. The data is inconclusive.
Regardless, instead of arguing over which commercial property takes which spot and trying to engineer the perfect fit with the limitations we are dealing with, we should be increasing the amount of places that are zoned for commerce. This will bring increased demand for labor, which will increase wages.
ghaff · 4h ago
You'd probably have to know more about what the jobs were. Certainly there's more self-service and fewer people waiting around to help customers in large stores than there were at one time. And small-time retail has also fairly visibly declined in favor of big-box and online purchases.
delusional · 3h ago
> but in theory they need welfare checks now to survive since they probably can't justify anyone paying them $20/hr
Are you implying that there are people in the world who just can't do anything productive enough to be worth $20/hour? That they are so useless that this was the only thing worth doing with them?
That seems fucking insane. If that's true, we have a huge problem with misallocation of value.
sokoloff · 1h ago
I think it's self-evidently true that there is a not ignorable group of people who can't create enough value to be worth being paid $20/hr (plus the employer-paid overheads) and have that be something that an employer would voluntarily do.
Around 10% of the population does not score highly enough on the ASVAB (an aptitude test for the military) to qualify for military service. The military, like any large employer, has an awful lot of jobs that require minimal skills and aptitude and for 10% to be Category V [unqualified for military service] based on aptitude, I would expect they wouldn't be the employees to create $20+/hr in value for private sector or other government employers either.
p1dda · 4h ago
What do you think happened to the tens of thousands that lost their jobs? Are they homeless now?
delusional · 3h ago
I'd hope we could find something more productive for them to do.
hyperman1 · 13m ago
One possible reason: People don't need a second job anymore.
po1nt · 4h ago
It's 100% lower wages for those who lost jobs.
StevenWaterman · 4h ago
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 $108 from taxes
Now everyone is paid at least as much as they were before, and fewer people are forced to perform labour
In practice it was only 3% unemployment not 10%, which means the tax increase is less and there is more of an incentive to continue working. You can also pay the displaced workers less than their original wage, to reach an equilibrium where everyone is happy with either work+more money, or leisure+less money. Or have it be age-based with an earlier retirement. Or have people work part-time.
We need to stop seeing having a job as being inherently good. Being able to live is good. Humanity should strive for 100% unemployment.
po1nt · 3h ago
Then we should increase the minimum wage to 200$/hr or more.
StevenWaterman · 3h ago
The total salary would go down if you did that
simianwords · 4h ago
Also consider non linear utility of money.
skrebbel · 4h ago
For hamburger flippers? A 25% increase in wage might well be superlinear for some of them (eg better circumstances and opportunities for kids)
simianwords · 4h ago
Yeah but the other people lost their jobs and 100% of wages. So you can compare net utility gain or loss.
skrebbel · 19m ago
Yes but that’s not the argument you made.
ath3nd · 4h ago
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.
bravesoul2 · 4h ago
They are working the same hours elsewhere for free?
po1nt · 3h ago
They might be living in a tent on a sidewalk for free if you ban them from working.
frikskit · 4h ago
Why not set very low maximum wage ceilings and have 100% employment? /s
themafia · 4h ago
Are you going to reduce lottery payouts and maximum stock investments as well?
Will I still be allowed to hunt for food?
Society is something better encouraged than gamified.
roenxi · 4h ago
Because that happens naturally without a law. People lower the wage they ask for until they get a job.
actionfromafar · 4h ago
I think they were sarcastic.
frikskit · 4h ago
Thanks, yes, I was trying to show how the alternative is absurd
em500 · 3h ago
Why not set very high minimum wage floors and make 100% of worker rich? /s
Turns out economics is actually more difficult than "higher minimum wage is good/bad".
BriggyDwiggs42 · 4h ago
Correct?
alphazard · 4h ago
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.
sroussey · 4h ago
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.
toast0 · 3h ago
Labor reduction in fast food doesn't necessarily look like 'automation'
It's things like self-ordering, machines that make change (if cash handling still matters), conveyor ovens/charbroilers, more centralized food prep, self-service and automated beverage dispensing.
Plenty of automation is happening outside of California though. Here's an Illinois bases company's blurb about beverage automation [1].
Reducing labor in small amounts increases service capacity, and in large enough capacity lets you operate a restaurant with a smaller minimum crew.
Robots will always be cheaper, it is not a matter of if they will come, it is a matter of when. That is no reason the state should subsidise workers for big corporations by allowing them to pay such low income that workers are often eligible for social security.
JKCalhoun · 4h ago
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.
khalic · 4h ago
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
snapplebobapple · 3h ago
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
thrance · 4h ago
That's what you get after decades of relentless propaganda. Anything remotely socialist is completely taboo there.
nomilk · 4h ago
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.
twobitshifter · 1h ago
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.
throwaway4496 · 3h ago
> 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.
nomilk · 3h ago
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.
throwaway4496 · 3h ago
Yeah, nah, the idea that the problem with low income workers is that they're not pulling themselves by their shoestrings properly is well and thoroughly debunked.
People don't work in low income jobs because it is the easiest option, but because it is the only option often.
gibsonf1 · 4h ago
The 18,000 people who lost their jobs may disagree.
ath3nd · 3h ago
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.
RobKohr · 3h ago
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.
twobitshifter · 1h ago
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.
delusional · 3h ago
> 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.
roenxi · 4h ago
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.
skippyboxedhero · 4h ago
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).
delusional · 3h ago
> 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.
skippyboxedhero · 11m ago
I didn't say it doesn't have no impact on number of jobs. I said that the best that can be said is that it has no impact (I didn't say jobs here at all).
The government deciding the value of X is Y doesn't actually increase the actual value of anything, because that is decided by things the government does not control. Your point about carrots assumes, for some reason that you don't explain, that a firm chooses to sell for a price that is less than market-clearing (this happens all the time with people who make this argument: claims that businesses are both greedy and non-profit maximising). And this model is generally not true of labour either: minimum wage is minimum productivity, that is it, no need to talk about carrots.
Right, and you should be totally clear with people reading your comment: no economic theory supports what you are saying. Wages are productivity, the money to pay wages comes from customers, who choose to pay for something that the worker is producing. Minimum wages do not, and cannot, increase the share of productivity that is paid to workers anymore than the government can demand that shareholders accept lower returns. This is just total economic nonsense.
relaxing · 4h ago
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.
georgeburdell · 4h ago
It's been a generation since minimum age workers were mostly high school kids.
ath3nd · 4h ago
> 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.
unnamed76ri · 4h ago
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.
bravesoul2 · 3h ago
Seems like if McD needs this sort of labour its a weird business model. It can only deliver by paying people supported by their parents who are doing the work for pocket money or experience. And can only work outside of school hours and will need to quit in a year or two.
Now if they pay the teenager half the wage the same adult is doing then someone is getting a raw deal.
dvrj101 · 4h ago
solution : youth wage, below the standard minimum for the first year of work but that's not good enough for people who decided to close business because they cannot exploit anymore.
skippyboxedhero · 3h ago
This creates an incentive to hire lots of young people and not hire unskilled older people.
In the UK which has a youth wage, has had negative productivity growth, and has had a series of extremely unpopular governments who needed to use minimum wage growth to support their growth, you have seen large employers mix towards younger staff (where that is possible, in other cases you have seen employers use government programs to import below minimum wage migrants) and let go older staff en masse (employers in the UK also have auto-enroll into pensions, but only over 22).
It simply isn't possible, particularly in economies that have structural problems, for productivity growth to just appear magically when politicians request it.
This is a classic problem with economic intervention: you intervene, change incentives, agents do something unexpected, and the result is more intervention, more distortion, on and on. Politically, this is gold because politicians look like they are doing something. No-one asks whether that thing needs to be done at all.
unnamed76ri · 4h ago
California is home to the largest number of illegal immigrants being exploited for cheap farm labor. If CA really cared about exploited people, they would have done something about that. And by done something, I don’t mean encouraging and protecting its continuation.
ath3nd · 3h ago
> 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”
Said who? The same people who don't pay internships.
> 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.
When minimum wage goes up, other more skilled labor also goes up, and adults will go somewhere better paid. Then the business will have no choice but hire the kids at the $20/hr and they will get that work experience you so want to bestow upon them. It's funny you are trying to twist it like it's gonna be a problem to find work experience for the poor poor kids, while all we know the business care about is how to exploit people at the lowest possible pay.
It's always "think of the children" with a specific crowd, an unhealthy obsession with children, I'd say.
Think of the children and ban XYZ books cause poor children can't comprehend what they are reading (allows us to ban books we don't like)
Think of the children and introduce chat control so we can track everybody and monetize their data (allows us to exploit everybody)
Think of the children and don't raise the minimum wage cause poor children can't find internships and part time jobs (allows us to exploit everybody)
There is a pattern here, not sure if you are ready to acknowledge it.
unnamed76ri · 3h ago
Your utopian worldview has come up against the reality of 18k people being out of work.
“We are going to increase minimum wage so you can have a livable wage!”
“Yay!…wait now I have no wages. Why didn’t this work like you said?”
ath3nd · 1h ago
> “Yay!…wait now I have no wages. Why didn’t this work like you said?”
"Though in the same month, the U.S. Bureau of Labor Statistics showed California had approximately 750,000 fast food jobs, roughly 11,000 more than when the higher minimum wage law took effect"
"The Center on Wage and Employment Dynamics at UC Berkeley compared Glassdoor job posts and online food menu prices two weeks before the minimum wage raise and 2 weeks after. It found that wages increased by 18%, employment numbers remained stable and menu prices increased by only 3 to 7%, or 15 cents on a $4 burger."
Employment numbers remained stable, which is great, meaning the 18k people now are employed at other places at at least 20-25% wage increase. I will repeat it again: If a business can't afford to pay its workers, the business shouldn't exist.
mc32 · 4h ago
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.
ath3nd · 3h ago
> Also, now those people affected have no wages.
Nah, most of them are most likely already employed somewhere else at a 25% wage increase.
Note that the unemployment actually didn't spike up according to a different study: https://www.nbcbayarea.com/investigations/california-minimum... so that allows us to assume these people got a better wage somewhere else, at only a marginal increase to the consumer.
mc32 · 3h ago
It's possible. It's probably too early to tell and things will settle in due time.
One possible outcome is that if high minimum wages are placed across the board in all states and the feds enforce e-verify that we'll become a bit like Switzerland where everyone nominally earns more compared to other OECD countries but also things (good and services) are relatively more expensive too. It potentially could pull people who've been out of the labor pool (undercut by low wages/cheap labor) back in to it, if the right policies are put in place.
It's probably not a bad deal for US workers as we all would have a higher standard of living but also live in a more expensive society --in the end that's probably better for everyone (in the US).
twobitshifter · 1h ago
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.
croes · 4h ago
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.
ethan_smith · 4h ago
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.
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.
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.
That seems unlikely to be just that though, this study was just on the people who lost jobs. If 20,000 people are out of a job, there is probably another larger cohort on less hours. And we also don't know how much wages rose. The people who were fired were the ones who could only justify being paid the minimum. The ones who stayed might already have been paid more like $17, $18 or $19/hr.
So yes to what you say, but the study doesn't say anything about whether total compensation went up or down.
The gap between what a minimum wage job pays and what it costs to scrape by is covered by government or charity, if they didn't do that the workers would die, which means the jobs don't get done, so that means the resource spent by governments or charities as a result of a low minimum wage is a subsidy for the employer. Instead of paying what it costs they get it for cheaper to create a fiction of "employment".
I don't think it's nearly that clear. Western nations are at a near record low unemployment rate. We should want to remove low paying jobs.
Regardless, instead of arguing over which commercial property takes which spot and trying to engineer the perfect fit with the limitations we are dealing with, we should be increasing the amount of places that are zoned for commerce. This will bring increased demand for labor, which will increase wages.
Are you implying that there are people in the world who just can't do anything productive enough to be worth $20/hour? That they are so useless that this was the only thing worth doing with them?
That seems fucking insane. If that's true, we have a huge problem with misallocation of value.
Around 10% of the population does not score highly enough on the ASVAB (an aptitude test for the military) to qualify for military service. The military, like any large employer, has an awful lot of jobs that require minimal skills and aptitude and for 10% to be Category V [unqualified for military service] based on aptitude, I would expect they wouldn't be the employees to create $20+/hr in value for private sector or other government employers either.
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.
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.
Will I still be allowed to hunt for food?
Society is something better encouraged than gamified.
Turns out economics is actually more difficult than "higher minimum wage is good/bad".
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.
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 things like self-ordering, machines that make change (if cash handling still matters), conveyor ovens/charbroilers, more centralized food prep, self-service and automated beverage dispensing.
Plenty of automation is happening outside of California though. Here's an Illinois bases company's blurb about beverage automation [1].
Reducing labor in small amounts increases service capacity, and in large enough capacity lets you operate a restaurant with a smaller minimum crew.
[1] https://dimontegroup.com/projects/cornelius-quick-serve-pro/
- 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.
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.
People don't work in low income jobs because it is the easiest option, but because it is the only option often.
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.
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.
Why? It would seem to me that there's plenty of room in the balance sheets to just pay people more.
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.
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).
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.
The government deciding the value of X is Y doesn't actually increase the actual value of anything, because that is decided by things the government does not control. Your point about carrots assumes, for some reason that you don't explain, that a firm chooses to sell for a price that is less than market-clearing (this happens all the time with people who make this argument: claims that businesses are both greedy and non-profit maximising). And this model is generally not true of labour either: minimum wage is minimum productivity, that is it, no need to talk about carrots.
Right, and you should be totally clear with people reading your comment: no economic theory supports what you are saying. Wages are productivity, the money to pay wages comes from customers, who choose to pay for something that the worker is producing. Minimum wages do not, and cannot, increase the share of productivity that is paid to workers anymore than the government can demand that shareholders accept lower returns. This is just total economic nonsense.
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.
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.
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.
Now if they pay the teenager half the wage the same adult is doing then someone is getting a raw deal.
In the UK which has a youth wage, has had negative productivity growth, and has had a series of extremely unpopular governments who needed to use minimum wage growth to support their growth, you have seen large employers mix towards younger staff (where that is possible, in other cases you have seen employers use government programs to import below minimum wage migrants) and let go older staff en masse (employers in the UK also have auto-enroll into pensions, but only over 22).
It simply isn't possible, particularly in economies that have structural problems, for productivity growth to just appear magically when politicians request it.
This is a classic problem with economic intervention: you intervene, change incentives, agents do something unexpected, and the result is more intervention, more distortion, on and on. Politically, this is gold because politicians look like they are doing something. No-one asks whether that thing needs to be done at all.
Said who? The same people who don't pay internships.
> 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.
When minimum wage goes up, other more skilled labor also goes up, and adults will go somewhere better paid. Then the business will have no choice but hire the kids at the $20/hr and they will get that work experience you so want to bestow upon them. It's funny you are trying to twist it like it's gonna be a problem to find work experience for the poor poor kids, while all we know the business care about is how to exploit people at the lowest possible pay.
It's always "think of the children" with a specific crowd, an unhealthy obsession with children, I'd say.
Think of the children and ban XYZ books cause poor children can't comprehend what they are reading (allows us to ban books we don't like)
Think of the children and introduce chat control so we can track everybody and monetize their data (allows us to exploit everybody)
Think of the children and don't raise the minimum wage cause poor children can't find internships and part time jobs (allows us to exploit everybody)
There is a pattern here, not sure if you are ready to acknowledge it.
“We are going to increase minimum wage so you can have a livable wage!”
“Yay!…wait now I have no wages. Why didn’t this work like you said?”
It did. https://www.nbcbayarea.com/investigations/california-minimum...
"Though in the same month, the U.S. Bureau of Labor Statistics showed California had approximately 750,000 fast food jobs, roughly 11,000 more than when the higher minimum wage law took effect"
"The Center on Wage and Employment Dynamics at UC Berkeley compared Glassdoor job posts and online food menu prices two weeks before the minimum wage raise and 2 weeks after. It found that wages increased by 18%, employment numbers remained stable and menu prices increased by only 3 to 7%, or 15 cents on a $4 burger."
Employment numbers remained stable, which is great, meaning the 18k people now are employed at other places at at least 20-25% wage increase. I will repeat it again: If a business can't afford to pay its workers, the business shouldn't exist.
Now, for many that’s okay. People just have to be okay that that happens.
Also, now those people affected have no wages.
Nah, most of them are most likely already employed somewhere else at a 25% wage increase.
Note that the unemployment actually didn't spike up according to a different study: https://www.nbcbayarea.com/investigations/california-minimum... so that allows us to assume these people got a better wage somewhere else, at only a marginal increase to the consumer.
One possible outcome is that if high minimum wages are placed across the board in all states and the feds enforce e-verify that we'll become a bit like Switzerland where everyone nominally earns more compared to other OECD countries but also things (good and services) are relatively more expensive too. It potentially could pull people who've been out of the labor pool (undercut by low wages/cheap labor) back in to it, if the right policies are put in place.
It's probably not a bad deal for US workers as we all would have a higher standard of living but also live in a more expensive society --in the end that's probably better for everyone (in the US).
Would that be incomplete? Higher minimum wage could cause higher employment in other sectors or raise their revenue and wages.