California’s Higher Minimum Wage Already Killing Jobs

A Pizza Hut store in Costa Mesa, Calif., on Dec. 27, 2023. John Fredricks/The Epoch Times

Commentary

It’s so predictable. Raise the minimum wage. Kill jobs. Especially for the young and the poor trying to get ahead in life.

There are several news stories on Pizza Hut franchises laying off 1,200 drivers ahead of California’s minimum wage for fast-food workers rising from $16 an hour to $20 on April 1. But the articles didn’t note many of these workers already make that much if tips are included. Now they’re all unemployed.

That’s the problem with government manipulation of the market: unintended consequences. The law killing these jobs is Assembly Bill 1228, by Assemblymember Chris R. Holden (D-Pasadena). And it creates another state bureaucracy, the Fast Food Council, to impose even more regulations. The council can also raise the $20 wage even higher starting in 2025.

The bill’s language includes this bureaucratic word salad: “ The council is charged with developing minimum fast food restaurant employment standards, including, as appropriate, standards on wages, working conditions, and training, as are reasonably necessary or appropriate to protect and ensure the welfare, including the physical well-being and security, of fast food workers.”

The bill’s 5,049 words, by my count, don’t include anything on “tips.” Perhaps that will come in the future, making things worse.

In his Sept. 28 signing statement, Gov. Gavin Newsom wrote: “California is home to more than 500,000 fast-food workers who—for decades—have been fighting for higher wages and better working conditions. Today, we take one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast-food workers a stronger voice and seat at the table.”

It will take a couple of years to find out how many more of those more than 500,000 workers end up in unemployment lines from this bill.

The $20 wage also will tend to push up wages in other fields, leading to more layoffs. Employers naturally seek the best workers: those who show up on time and do good work. If the floor in this large industry now is a wage of $20, then good employees will be more likely to move into it from other industries, unless those industries also raise their wages.

This might seem like a good thing—and it is, if you’re one of those not laid off. And if you’re not an employer who has to raise prices to cover the higher wages—or is considering closing. Or if you’re not a customer paying more for your pizza.

AB 1228 also only affects fast-food companies with “more than 60 establishments nationally.” So it won’t directly affect your local mom-and-pop burger joint. But it will indirectly because those smaller places are most likely to lose the best workers to the remaining fast-food restaurants forced to pay the higher wages.

Restaurants already are an endangered business. The latest I’ve noticed closing in Orange County: Red Hill Café, a nice breakfast place on East Dyer Road in Santa Ana, where I’ve been going for years.

The Robb Report also headlined on Dec. 23, “L.A. Restaurants Shuttered at an Alarming Rate This Year. Here’s Why. The city has seen both casual and fine-dining spots shut their doors in 2023.” The story: “While the reasons for each individual closure vary, it was a difficult year in many ways, thanks to the strikes in Hollywood, the rising costs of food and labor, and downstream effects from the pandemic.”

It quoted Kristin Ciccolella, the owner of the Anchor in Venice, which closed shortly after the article came out. “I think it’s been the worst year and that this is just the scraping of the surface,” she said. “I think there’s going to be a mass exodus by March, if places even survive January. It’s brutal out there.”

Mr. Newsom owns some hoity-toity restaurants in Northern California. They got a pandemic loan from the federal government of up to $350,000 in 2020 during the pandemic. He said his business interests are in a blind trust. But these places cater to rich people who can afford higher menu prices.

He also notoriously attended a party at the French Laundry during the pandemic when he was ordering everybody else to “isolate.” Plates there are $350 each.

This is the typical “do as I say, not as I do” attitude so prevalent today in America’s ruling elites. Al Gore, Bill Gates, and other oligarchs fly on private jets around the world to attend climate conferences pushing rules to restrict regular people’s mobility. Mr. Newsom and other politicians guarded by armed state troopers or other police demand gun control for the populace.

The minimum wage is an especially harsh law for regular people. The late economist Walter Williams did seminal work on how the minimum wage especially hurts blacks and other minorities. When they’re just starting out, people need a job of any kind to get started.

Here’s how he explained it to Time magazine as long ago as 1980, just after the national minimum wage increased from $2.90 to $3.10 an hour: “How else do you explain the massive change from waiter service to self-service in restaurants? How else do you explain the absence of ushers in movies and youngsters at supermarkets to take your bags to the car? We have cut the bottom rungs off the economic ladder, and the consequence is that for the first time in U.S. history, we have developed a permanent welfare class.”

Time added, “In Williams’ view, the rising minimum guarantees maximum unemployment for the young and unskilled, particularly blacks. ... At very least, says Williams, the wage law should be amended to provide youth differential, allowing employers to pay people under 20 less than the federal minimum. This would create no hardship because almost all people on the minimum wage are unmarried or part-time employees; no more than one-half of 1 percent are responsible for supporting a family.”

It seems the folly of a high minimum wage never goes away. Especially in California, the capital of economic folly.