The California Job-Killer That Wasn’t | The state raised the minimum wage for fast-food workers—and employment kept rising. So why has the law been proclaimed a failure?
The California Job-Killer That Wasn’t | The state raised the minimum wage for fast-food workers—and employment kept rising. So why has the law been proclaimed a failure?
The state raised the minimum wage for fast-food workers—and employment kept rising. So why has the law been proclaimed a failure?
That doesn’t mean raising the minimum wage had no negative consequences. Reich and his co-author, Denis Sosinsky, found that the higher minimum wage caused menu prices in California fast-food chains to rise by about 3.7 percent. That number is far lower than the “$20 Big Macs” that critics of the law warned of, but it’s still significant at a time when many consumers are deeply upset over the post-pandemic spike in food prices. Even so, Reich points out that this number pales in comparison with the 18 percent raise that the average fast-food worker received because of the new law. (The authors calculated that about 62 percent of the wage increase was absorbed through higher prices, while the rest was likely absorbed by a mix of reduced turnover and, crucially, lower profits for franchisees—hence the massive industry resistance.)
It’s been declared a failure because the corporate overlords say so.
77Yeah, the three percent rise likely would have happened either way. The prices are what the economy will tolerate not the cost of business. If the cost of business exceeds the price the economy will tolerate the business folds. This should make the businesses that are left over more efficient. The most efficient countries (highest GDP) tend to have higher wages.
40Another perspective is that a 3% increase in prices - even without non-labor inflation - to pay people closer to a living wage reflects a more accurate cost of that dining experience. It could be that the public is subsidizing those restaurants' labor through social programs that make up the difference vs a living wage
As you noted, with the real (or at least more realistic) cost of eating out reflected in the pricing, consumers will decide if that experience is worth it. And some businesses may close. And that's called capitalism
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People complaining about fast food prices come across as entitled to me. How are you going to complain about underpaid staff making you a meal as quickly as possible when it’s not even healthy or good for the environment?
I just don’t understand why this is a metric we measure things by. Are we that lazy that we can’t be bothered to make do without a burger sometimes?
36Are we that lazy that we can’t be bothered to make do without a burger sometimes?
Yes. 3/4 of America is fat to super fat.
8Apparently for some people in food deserts, it's their only viable option. Fast food prices going up means cost of living increased.
7From a purely consumer perspective, fast food prices increased to the price territory of superior fast casual and independent restaurants while being significantly lower quality.
How did this happen without the other options increasing prices at the same rate? McDonalds lost their value proposition and eaters adjusted.
People didn’t stop ordering burgers, but they can get a great one over McD’s for maybe 20% more cost.
4That's a good thing, though. They make shit food, pay people shit, charge nothing and do it fast. This is not really a business we need around. The only thing that benefits from McDonald's is people scratching their impatience.
I say let them learn to be a real restaurant that makes, you know, food, or fuck off. Keep cranking those wages up.
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It obviously doesn't affect you, why are you bothering to care?
2Exactly, just don't eat there.
then McDonalds goes under and nobody has a job!
...but.
How are we winning, people?
1Apparently for some people in food deserts, it's their only viable option. Fast food prices going up means cost of living increased.
1
Yup. Overwhelming success for the economy as it always is whenever you raise the minimum wage.
37Yeah, there's probably some level that's too high, but $16 to $20 per hour is pretty clearly a long ways from it still.
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I dunno, opposition releasing and having to retract several rounds of bad stats before landing on prices went up a little seems suspect.
Plus fast food prices went up in my state too but there wasn't a minimum wage increase. 🫠
1