Liberal Workers Receive BRUTAL REALITY CHECK After RIDICULOUS Fast Food Minimum Wage HIKE!
Quick Read
Summary
Takeaways
- ❖California's AB228 raised the fast food minimum wage from $16.21 to $20 per hour, effective April 1st.
- ❖Immediate consequences included a 12% price increase at Burger King and a 25-cent increase per item at In-N-Out.
- ❖Mod Pizza closed 27 restaurants, including five in California, with former employees suspecting the wage hike as a factor.
- ❖A UC Santa Cruz study found that the wage increase led to more job applicants but fewer hires, reduced worker hours, increased automation (kiosks), and higher consumer prices.
- ❖A McDonald's franchise owner with 18 locations cut employee hours by over 11.5%, equivalent to 62 full-time jobs.
- ❖The host argues fast food jobs are entry-level, meant for teenagers, and not designed to provide a 'livable wage'.
- ❖Businesses are also opening later and closing earlier to manage costs, impacting small, family-owned restaurants not directly subject to the $20 wage but facing wage pressure.
Insights
1California's AB228 Mandates Significant Wage Hike
The law increased fast food worker pay from $16.21 to $20 per hour, with annual 3.5% increases and established a government council to set future wages until 2029.
AB228 implemented a government-mandated pay raise for all fast food workers from 1621 to $20 per hour. The bill requires annual wage increases of 3.5% and creates a special fast food council within the government.
2Immediate Price Increases Followed Wage Hike
Upon implementation, fast food prices surged, with a Burger King meal increasing by 12% overnight and In-N-Out Burger prices rising by 25 cents per item.
Burger King... a Texas Devil Whopper... cost $15.09 on March 29th. By April 1st, when the law went into effect, it sprung up to $16.89. That's a 12% increase overnight. Over at In-N-Out Burger... Prices shot up by 25 a quarter.
3Layoffs and Store Closures Attributed to Wage Law
Mod Pizza shut down 27 restaurants across the US, including five in California, with former employees linking the timing to the minimum wage increase.
Employees at Mod Pizza and Clover are now saying corporate shut the store without notice... Mod Pizza has shut down 27 restaurants across the US, including five in California.
4UC Santa Cruz Study Reveals Negative Worker Impacts
A study from UC Santa Cruz suggests the $20 minimum wage led to more job applications but fewer hires, reduced worker hours, and increased automation, contradicting the policy's goal.
The study shows more people are applying for fast food jobs, but many are not seeing increased hours or even securing employment at all. It also finds businesses are cutting shifts... and more machines are replacing workers.
5Conflicting Study from UC Berkeley Dismissed by Host
A September 2024 UC Berkeley study claimed the wage increase boosted pay without job cuts and only slight price increases, but the host and other reports dismiss these findings as 'fake studies'.
These findings also push back against a study conducted in September of 2024 by UC Berkeley's Institute for Research on Labor and Employment, which found the wage increase boosted pay, did not force job cuts, and prices only slightly went up.
6McDonald's Franchise Cut Hours Significantly
A McDonald's franchise owner with 18 Central Valley locations cut employee hours by over 11.5% after the wage law, equating to 62 full-time jobs.
UC Santa Cruz researchers also spoke with a McDonald's franchise owner in the Central Valley of 18 locations. They found employees got their hours cut by over 11 and a half% after the wage law took effect. That drop equals to about 62 full-time jobs.
Lessons
- Policymakers should conduct thorough, unbiased economic impact assessments before implementing significant minimum wage hikes, considering potential consequences like job displacement, reduced hours, and price inflation.
- Businesses facing increased labor costs must strategically evaluate options such as price adjustments, automation investments, and operational efficiency improvements to maintain profitability.
- Workers seeking employment in industries affected by rapid wage increases should be aware of potential shifts towards automation and reduced available hours, and consider developing skills that are less susceptible to replacement.
Quotes
"They begged for a minimum wage increase and they ended up with no wages, right? As a result, it's almost as if economically literate and conservative uh people uh tried to warn these individuals what the consequences are of raising the minimum wage too quickly and too much."
"You can't just arbitrarily increase the cost of labor and expect for owners to eat it... They're going to increase prices or they're going to cut spending somewhere else. They're going to cut hours... They're going to replace workers with robots."
"These jobs are entry-level jobs, okay? They're jobs for teenagers, for children. Kids should be doing these jobs... These jobs were never meant to provide a living wage."
Q&A
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