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California's New Minimum Wage Comes with a Pink Slip

A California man walks into a Phoenix, AZ, fast-food restaurant and asks for the manager.
“I saw the sign in the window that says you’re hiring. I’d like to apply for a job,” the traveler tells the manager.
“Sure,” the manager replies. “Have you ever worked in a fast-food restaurant?”
“Of course, for several years.”
“Great,” says the manager, “Can you start tomorrow?”
“You bet, and thank you. Oh, what’s the pay?”
“Why, $15 per hour. That’s the best you’ll find in the fast-food business around here, and 65 cents more an hour than Arizona’s new minimum wage of $14.35,” the manager boasts.
“What!?” responds the applicant. “In California, where I’m from, the state government requires fast-food restaurants to pay $20 per hour.”
“Ah,” wonders the manager, “Then why don’t you go back to California and get a job there?”
“I had one until recently,” the applicant laments, “but the restaurant had to lay off staff.”
California has just raised the minimum wage for fast-food workers to $20/hour. And the result is what any rational economist—which does not include progressives—would expect. Businesses have started laying off staff. Or in some cases cutting hours or raising prices.
And some fast-food restaurants are increasing the availability of kiosks, which don’t demand raises or health insurance.
According to the Wall Street Journal

  • “Franchisees for Pizza Hut and Round Table Pizza, a chain of around 400 units founded in Menlo Park, Calif., have said they plan to lay off around 1,280 delivery drivers this year.”
  • “Excalibur Pizza, owner of Round Table Pizza locations in California, said in a state filing that it would eliminate 73 driver positions, or 21% of its workforce, by mid-April.”
  • An owner of 10 Auntie Ann’s and Cinnabon restaurants “has reduced his staff by about 10, and his 73-year-old parents have returned to working in the business to help shave costs.”

Those who are fortunate enough to keep their job may earn more money, but the work load may be expanded and customer satisfaction may decline.
News stories often suggest economists disagree about the job-losing impact of government-imposed minimum wage increases.  But there really isn’t a debate. If a mandated minimum wage increase is small—around or just a little more than what most employers are already paying for low-skilled labor—the increase probably won’t have much of a negative impact.
But if the increase is significant, it absolutely will have a negative impact—on employers, customers and workers. Just ask the thousands of former California fast-food workers who are looking, or soon will be looking, for a new job.