California’s list of public policy failures was already long, but hiking its minimum wage to $20 an hour for fast-food workers may belong at the top.
The predictable fallout in lost jobs and higher prices are already being felt, and the flood of residents fleeing the state is poised to accelerate.
California is already home to some of the highest taxes and costs of living in the country, the consequences of failed government policies. A higher minimum wage is more of the same.
Consider California’s “green” energy policies, which have created the highest utility rates in the nation. Instead of rolling back those mandates, the state created a new one: surcharges on utility bills, making the middle class pay more even if they don’t use more.
The overtaxing, overspending, and overregulating by the state government in Sacramento has turned California into such a basket case that 1.2 million more people left the state than moved in over the past three years—by far the biggest loss of any state and beating New York by 35%.
Californians clearly don’t like the effects of these policies, but they just got more of them with the higher minimum wage law for fast-food workers. This particular policy provides a superb example of how disastrous economic ideas become law: wonderful rhetoric, terrible results.
The law was advertised as forcing “greedy” corporations to pay workers a “living wage.” But businesses aren’t charities and can’t pay employees more than they produce or they’ll go bankrupt. Employers pay taxes and other costs on top of an employee’s earnings; at $20 an hour, many fast-food workers don’t provide enough value to justify the highest minimum wage in the country.
Not surprisingly, California’s fast-food companies have frozen hiring. Some are already announcing mass layoffs. This is not a small cohort of workers: California is, at least for now, home to half a million fast-food workers.
That number is already dropping and is set to plunge soon. McDonald’s has been investing millions of dollars in fully automated restaurants and opened the first such restaurant last year. Jack in the Box and El Pollo Loco, the Mexican chicken chain, both announced that they’ll use robotics to fully automate cooking and cashier functions.
The machines are cheaper than employing people at artificially inflated wage rates, plus the additional costs such as training, payroll taxes, and vulnerability to lawsuits, thanks to lawyer lobbies.
Where fast-food workers can’t be replaced, their jobs effectively will be outsourced. About 1,100 Pizza Hut delivery drivers are set to lose their jobs, with more layoffs announced at another restaurant chain, Round Table Pizza.
Consumers will have to use food delivery apps (also being targeted by California’s notorious legislation, AB 40), or they’ll have to pick up their orders themselves.
Apologists claim that corporations are just posturing and won’t really lay off thousands of workers. That thinking is largely made possible by the fact that many politicians never have run a business, had to make payroll, or hired minimum-wage workers.
In short, advocates of the $20 minimum wage don’t understand the impact of the policy they’re pushing. All the politicians know is that it’s a reliable vote winner—even if it throws low-wage workers under the bus not once, but twice.
Hiking the minimum wage causes job losses, but it also increases prices. Because lower-income folks disproportionately eat at fast-food restaurants, they bear the brunt of these higher costs, in addition to losing their jobs.
A minimum wage of $20 an hour is really a state ban on any job that pays less than $20. Californians in that category either must go somewhere else where such work is still legal, work illegally “under the table,” or rely on welfare.
But the insanity doesn’t end there. The law also creates a Fast-Food Council that can raise the minimum wage for fast-food workers by another 3.5% per year, every year, until no fast-food workers are left standing.
California will continue to hemorrhage residents, and that rate of outmigration likely will accelerate as politicians target low-income workers with wage mandates and inflation. Eventually, all those willing to work will leave. The only ones left will be those on the state’s bloated welfare rolls.
The Golden State is killing the goose that laid its golden eggs.
Originally published by Fox Business
