[HN Gopher] Did California's fast food minimum wage reduce emplo...
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Did California's fast food minimum wage reduce employment?
Author : lxm
Score : 53 points
Date : 2025-08-09 09:54 UTC (13 hours ago)
(HTM) web link (www.nber.org)
(TXT) w3m dump (www.nber.org)
| roenxi wrote:
| As always, the world is quite messy and one study doesn't really
| tell us very much. Maybe the Californian fast food sector is just
| having a tough time for unrelated and coincidental reasons.
|
| However, the theory always said that a minimum wage rise reduces
| the number of jobs so it is a strong chance that around 20,000
| people were put out of work by this policy.
| ath3nd wrote:
| > However, the theory always said that a minimum wage rise
| reduces the number of jobs so it is a strong chance that around
| 20,000 people were put out of work by this policy.
|
| 20,000 people were put out of jobs by employers who didn't want
| to pay them what they are worth and instead wanted to exploit
| them. If you can't afford to pay livable wages to your workers,
| your business shouldn't exist.
| unnamed76ri wrote:
| Aside from really terrible home experiences for a tiny
| minority, a part time job for a 15 year old doesn't need a
| "livable wage"
|
| We don't need kids working in coal mines but we also don't
| need to make it near impossible for them to get work
| experience at a part time job because their skill level
| doesn't align with $20/hr.
| dvrj101 wrote:
| solution : youth wage, below the standard minimum for the
| first year of work but that's not good enough for people
| who decided to close business because they cannot exploit
| anymore.
| unnamed76ri wrote:
| California is home to the largest number of illegal
| immigrants being exploited for cheap farm labor. If CA
| really cared about exploited people, they would have done
| something about that. And by done something, I don't mean
| encouraging and protecting its continuation.
| skippyboxedhero wrote:
| This creates an incentive to hire lots of young people
| and not hire unskilled older people.
|
| In the UK which has a youth wage, has had negative
| productivity growth, and has had a series of extremely
| unpopular governments who needed to use minimum wage
| growth to support their growth, you have seen large
| employers mix towards younger staff (where that is
| possible, in other cases you have seen employers use
| government programs to import below minimum wage
| migrants) and let go older staff en masse (employers in
| the UK also have auto-enroll into pensions, but only over
| 22).
|
| It simply isn't possible, particularly in economies that
| have structural problems, for productivity growth to just
| appear magically when politicians request it.
|
| This is a classic problem with economic intervention: you
| intervene, change incentives, agents do something
| unexpected, and the result is more intervention, more
| distortion, on and on. Politically, this is gold because
| politicians look like they are doing something. No-one
| asks whether that thing needs to be done at all.
| ath3nd wrote:
| > Aside from really terrible home experiences for a tiny
| minority, a part time job for a 15 year old doesn't need a
| "livable wage"
|
| Said who? The same people who don't pay internships.
|
| > but we also don't need to make it near impossible for
| them to get work experience at a part time job because
| their skill level doesn't align with $20/hr.
|
| When minimum wage goes up, other more skilled labor also
| goes up, and adults will go somewhere better paid. Then the
| business will have no choice but hire the kids at the
| $20/hr and they will get that work experience you so want
| to bestow upon them. It's funny you are trying to twist it
| like it's gonna be a problem to find work experience for
| the poor poor kids, while all we know the business care
| about is how to exploit people at the lowest possible pay.
|
| It's always "think of the children" with a specific crowd,
| an unhealthy obsession with children, I'd say.
|
| Think of the children and ban XYZ books cause poor children
| can't comprehend what they are reading (allows us to ban
| books we don't like)
|
| Think of the children and introduce chat control so we can
| track everybody and monetize their data (allows us to
| exploit everybody)
|
| Think of the children and don't raise the minimum wage
| cause poor children can't find internships and part time
| jobs (allows us to exploit everybody)
|
| There is a pattern here, not sure if you are ready to
| acknowledge it.
| unnamed76ri wrote:
| Your utopian worldview has come up against the reality of
| 18k people being out of work.
|
| "We are going to increase minimum wage so you can have a
| livable wage!"
|
| "Yay!...wait now I have no wages. Why didn't this work
| like you said?"
| ath3nd wrote:
| > "Yay!...wait now I have no wages. Why didn't this work
| like you said?"
|
| It did.
| https://www.nbcbayarea.com/investigations/california-
| minimum...
|
| "Though in the same month, the U.S. Bureau of Labor
| Statistics showed California had approximately 750,000
| fast food jobs, roughly 11,000 more than when the higher
| minimum wage law took effect"
|
| "The Center on Wage and Employment Dynamics at UC
| Berkeley compared Glassdoor job posts and online food
| menu prices two weeks before the minimum wage raise and 2
| weeks after. It found that wages increased by 18%,
| employment numbers remained stable and menu prices
| increased by only 3 to 7%, or 15 cents on a $4 burger."
|
| Employment numbers remained stable, which is great,
| meaning the 18k people now are employed at other places
| at at least 20-25% wage increase. I will repeat it again:
| If a business can't afford to pay its workers, the
| business shouldn't exist.
| bravesoul2 wrote:
| Seems like if McD needs this sort of labour its a weird
| business model. It can only deliver by paying people
| supported by their parents who are doing the work for
| pocket money or experience. And can only work outside of
| school hours and will need to quit in a year or two.
|
| Now if they pay the teenager half the wage the same adult
| is doing then someone is getting a raw deal.
| timbit42 wrote:
| A 15 year old DOES need a living wage. How else are they
| going to save for post-secondary education? Is keeping them
| out of post-secondary preferable to you? Maybe your parents
| paid for yours, but not everyone has that.
| mc32 wrote:
| Didn't want to often can mean cannot. Many of those
| businesses would go bankrupt. Also some people who may have
| started a business will now forgo that possibility.
|
| Now, for many that's okay. People just have to be okay that
| that happens.
|
| Also, now those people affected have no wages.
| ath3nd wrote:
| > Also, now those people affected have no wages.
|
| Nah, most of them are most likely already employed
| somewhere else at a 25% wage increase.
|
| Note that the unemployment actually didn't spike up
| according to a different study:
| https://www.nbcbayarea.com/investigations/california-
| minimum... so that allows us to assume these people got a
| better wage somewhere else, at only a marginal increase to
| the consumer.
| mc32 wrote:
| It's possible. It's probably too early to tell and things
| will settle in due time.
|
| One possible outcome is that if high minimum wages are
| placed across the board in all states and the feds
| enforce e-verify that we'll become a bit like Switzerland
| where everyone nominally earns more compared to other
| OECD countries but also things (good and services) are
| relatively more expensive too. It potentially could pull
| people who've been out of the labor pool (undercut by low
| wages/cheap labor) back in to it, if the right policies
| are put in place.
|
| It's probably not a bad deal for US workers as we all
| would have a higher standard of living but also live in a
| more expensive society --in the end that's probably
| better for everyone (in the US).
| timbit42 wrote:
| If a business can't provide a living wage, then whoever is
| running it is bad at doing so or chose the wrong business
| model. They should close. Why do you want poor business
| operators to remain in business?
| mc32 wrote:
| There are many self-employed people in the third world
| who do not earn "living wages" what do you propose they
| do?
|
| Never was minimum wage equivalent to a living wage. A
| living wage is an ill-defined term. Does it mean I can
| afford the smallest apartment and afford just enough food
| to survive or are we adding small luxuries to this?
|
| None of the Nordic countries have a minimum wage --on the
| other hand they don't have a large undercurrent of
| illegal labor undercutting the minimum natives will
| accept as a minimum wage.
|
| That said, I don't have a horse in this fight. I don't
| think business have a "right" to cheap labor and if they
| can't survive without it, then so be it. Of course people
| have to understand their services and goods will go up in
| price and they should be okay with that. Maybe they stop
| depending on someone else doing and making things for
| them and start making their own stuff at home.
| relaxing wrote:
| The theory was raising the minimum wage wasn't important
| because it's mainly just kids who work after school jobs for
| minimum wage, right?
|
| I'd like to see if there's an increase in GPAs thanks to
| greater time for studying, or greater fitness from having more
| time to play a sport and lesser proximity to french fries.
| georgeburdell wrote:
| It's been a generation since minimum age workers were mostly
| high school kids.
| lanfeust6 wrote:
| And now it's what, temporary immigrant visas?
| skippyboxedhero wrote:
| These studies are completely pointless because they only
| measure one side of the problem.
|
| Minimum wage is minimum productivity. If a business is able to
| increase productivity, they will pay more and fire staff. If
| they won't then they shut down. And the side-effect, which
| cannot be measured by economists so doesn't exist, is that some
| will evade the limit. The theory isn't that minimum wage
| reduces jobs, it depends in every case...but the best that can
| be said is that it has no impact.
|
| Card and Kruger, for example, was/is presented as some kind of
| massive revolution. It is completely useless. Studies
| concentrate on fast food because it is one of the only sectors
| that has managed to increase productivity, the wider
| consequences are ignored. The only reason this industry for DiD
| minimum-wage papers exist is to give policymakers a button to
| push when their popularity is collapsing. The idea of the
| government dictating minimum labour productivity makes no sense
| (in the US, the policy mix also makes no sense because you have
| uncontrolled labour supply but the government sets minimum
| labour productivity...why? It is heaviest incentive for
| breaking the laws that you set, minimum productivity is set
| with the knowledge that it won't apply to many people).
| delusional wrote:
| > but the best that can be said is that it has no impact.
|
| You're doing what you disavow here. If it doesn't affect the
| number of jobs, then it increases the value of that job. If
| you can sell a carrot for a dollar more, and still sell out
| of carrots, you have a increased the economic activity
| without increasing production. The same is true for hours.
|
| This is not about increasing productivity. It's about
| increasing the share of that productivity that's paid out to
| workers.
| skippyboxedhero wrote:
| I didn't say it doesn't have no impact on number of jobs. I
| said that the best that can be said is that it has no
| impact (I didn't say jobs here at all).
|
| The government deciding the value of X is Y doesn't
| actually increase the actual value of anything, because
| that is decided by things the government does not control.
| Your point about carrots assumes, for some reason that you
| don't explain, that a firm chooses to sell for a price that
| is less than market-clearing (this happens all the time
| with people who make this argument: claims that businesses
| are both greedy and non-profit maximising). And this model
| is generally not true of labour either: minimum wage is
| minimum productivity, that is it, no need to talk about
| carrots.
|
| Right, and you should be totally clear with people reading
| your comment: no economic theory supports what you are
| saying. Wages are productivity, the money to pay wages
| comes from customers, who choose to pay for something that
| the worker is producing. Minimum wages do not, and cannot,
| increase the share of productivity that is paid to workers
| anymore than the government can demand that shareholders
| accept lower returns. This is just total economic nonsense.
| frikskit wrote:
| Small decrease in employment in exchange for ~25% higher wages
| for those employed? Did I get that right? Obviously every single
| row in the dataset is a unique human, but overall sounds like a
| big success?
| po1nt wrote:
| It's 100% lower wages for those who lost jobs.
| frikskit wrote:
| Why not set very low maximum wage ceilings and have 100%
| employment? /s
| roenxi wrote:
| Because that happens naturally without a law. People lower
| the wage they ask for until they get a job.
| actionfromafar wrote:
| I think they were sarcastic.
| frikskit wrote:
| Thanks, yes, I was trying to show how the alternative is
| absurd
| themafia wrote:
| Are you going to reduce lottery payouts and maximum stock
| investments as well?
|
| Will I still be allowed to hunt for food?
|
| Society is something better encouraged than gamified.
| em500 wrote:
| Why not set very high minimum wage floors and make 100% of
| worker rich? /s
|
| Turns out economics is actually more difficult than "higher
| minimum wage is good/bad".
| barchar wrote:
| This has been tried, and actually does work reasonably
| well.
|
| Well, not maximum wages as policy but policies where high
| productivity workers take a lower wage than they could
| individually bargain for in exchange for boosting wages of
| low productivity workers.
|
| It provides a windfall to the most productive industries
| and a squeeze to the least productive ones.
| simianwords wrote:
| Also consider non linear utility of money.
| skrebbel wrote:
| For hamburger flippers? A 25% increase in wage might well
| be superlinear for some of them (eg better circumstances
| and opportunities for kids)
| simianwords wrote:
| Yeah but the other people lost their jobs and 100% of
| wages. So you can compare net utility gain or loss.
| skrebbel wrote:
| Yes but that's not the argument you made.
| simianwords wrote:
| I didn't make any argument. I was expanding on parents
| point.
| skrebbel wrote:
| Yes and I was responding solely to your expansion, which
| I believe is inapplicable here.
| BriggyDwiggs42 wrote:
| Correct?
| ath3nd wrote:
| Nah, they didn't lose them, they got employed elsewhere for
| what they are worth, so if we do random calculations, it was
| probably something like 25% increase for many of them.
|
| The unemployment statistics were not influenced by raising
| the minimum wage here, so you can assume that the people who
| lost their low paid jobs simply moved elsewhere and got
| better paid jobs. It's mostly the employers' loss, which is
| how it should be. If you can't afford to start a business,
| don't start a business.
| StevenWaterman wrote:
| If the total salary has gone up, for less work done, it is a
| positive change. You can solve the inequal distribution via
| taxes and benefits.
|
| Start: 100 people paid $100
|
| After minimum wage change: 90 people paid $125, 10 people
| paid $0
|
| After tax increase: 90 people paid $113 + $12 taxes, 10
| people paid $108 from taxes
|
| Now everyone is paid at least as much as they were before,
| and fewer people are forced to perform labour
|
| In practice it was only 3% unemployment not 10%, which means
| the tax increase is less and there is more of an incentive to
| continue working. You can also pay the displaced workers less
| than their original wage, to reach an equilibrium where
| everyone is happy with either work+more money, or
| leisure+less money. Or have it be age-based with an earlier
| retirement. Or have people work part-time.
|
| We need to stop seeing having a job as being inherently good.
| Being able to live is good. Humanity should strive for 100%
| unemployment.
| po1nt wrote:
| Then we should increase the minimum wage to 200$/hr or
| more.
| StevenWaterman wrote:
| The total salary would go down if you did that
| thfuran wrote:
| Then we should just increase the presidential salary to
| 110% of the total 2024 US workforce salary.
| OrvalWintermute wrote:
| Total salary going up for less work can truly hurt people
| that are low, aptitude, low skill, and do not produce
| sufficient value to hit minimum wage.
| kgwgk wrote:
| "Less work done" doesn't look like a positive change, you
| can't tax your way out of a smaller pie. Specially if you
| strive for humanity to produce no pie to start with.
| bravesoul2 wrote:
| They are working the same hours elsewhere for free?
| po1nt wrote:
| They might be living in a tent on a sidewalk for free if
| you ban them from working.
| bravesoul2 wrote:
| They might get another job.
|
| People dont think holistically about the economy. They
| think there are jobs. When they go there are that fewer
| jobs. Immigrants come in a steal jobs. Etc.
|
| But in an economy, each richer consumer creates more
| jobs. The McD employees now buy better food, creating
| work for that supply chain. Or they can pay for
| education. Or they buy a takeaway coffee more often.
|
| The immigrants who come and do jobs work hard for lower
| pay them spend that money into the economy.
| sokoloff wrote:
| People with better fitness for employment had their situation
| improved. People with less fitness for employment may be more
| likely to be harmed.
|
| That's a big success for the former group for sure. Whether
| that's a policy success is slightly hazier than you presented I
| think, without other interventions to support those who are
| more likely to be harmed by the reduction in employment.
| MLR wrote:
| If it's actually only a 2.7% decline in employment relative
| to baseline then the increase in total wages paid would have
| to be very small to make this a bad policy.
|
| I agree that a lost job should carry some kind of premium
| compared to a total increase in wages paid, and you also have
| to go and look at the total hours worked to get a good
| picture, but if the total relative increase in remuneration
| was higher than about 10% or so I think that's probably
| enough to be able to hand wave the employment decrease.
|
| If it only turns out to be 5% I'd be a bit iffier about it.
|
| In the UK we have a pretty generous minimum wage (for over
| 21s), I think even relative to $20 in California, and the
| effect on employment has been very small while minimum wage
| jobs now give a pretty OK life, so I'm inclined to support
| high minimum wages generally.
| delusional wrote:
| > I agree that a lost job should carry some kind of premium
| compared to a total increase in wages paid
|
| I don't think it's nearly that clear. Western nations are
| at a near record low unemployment rate. We should want to
| remove low paying jobs.
| roenxi wrote:
| But that was the best job they could find. Presumably
| those people are going to be unemployed now. I mean,
| maybe they're kids and their families will have enough
| slack to just adsorb the change but in theory they need
| welfare checks now to survive since they probably can't
| justify anyone paying them $20/hr. So it actually costs
| the broader economy more than the salary they lost -
| firstly the work they were doing isn't being done,
| secondly someone else now has to work to earn the keep of
| the person who was just laid off because the job that
| paid them around what their skills were worth just got
| regulated out of existence.
| ghaff wrote:
| You'd probably have to know more about what the jobs
| were. Certainly there's more self-service and fewer
| people waiting around to help customers in large stores
| than there were at one time. And small-time retail has
| also fairly visibly declined in favor of big-box and
| online purchases.
| delusional wrote:
| > but in theory they need welfare checks now to survive
| since they probably can't justify anyone paying them
| $20/hr
|
| Are you implying that there are people in the world who
| just can't do anything productive enough to be worth
| $20/hour? That they are so useless that this was the only
| thing worth doing with them?
|
| That seems fucking insane. If that's true, we have a huge
| problem with misallocation of value.
| sokoloff wrote:
| I think it's self-evidently true that there is a not
| ignorable group of people who can't create enough value
| to be worth being paid $20/hr (plus the employer-paid
| overheads) and have that be something that an employer
| would voluntarily do.
|
| Around 10% of the population does not score highly enough
| on the ASVAB (an aptitude test for the military) to
| qualify for military service. The military, like any
| large employer, has an awful lot of jobs that require
| minimal skills and aptitude and for 10% to be Category V
| [unqualified for military service] based on aptitude, I
| would expect they wouldn't be the employees to create
| $20+/hr in value for private sector or other government
| employers either.
| ItsMonkk wrote:
| The abstract states that there are 2.7% less fast food
| jobs, not 2.7% less jobs. There might be 2.7% less fast
| food restaurants as a result of this change, but in their
| place will be other businesses that employ people of
| higher than minimum wage. Those businesses might hire the
| best fast food workers while the average fast food worker
| continues to be employed doing fast food. As a result,
| there may be no people who have now become unemployed as
| a result of this change, and only increases in wages. The
| data is inconclusive.
|
| Regardless, instead of arguing over which commercial
| property takes which spot and trying to engineer the
| perfect fit with the limitations we are dealing with, we
| should be increasing the amount of places that are zoned
| for commerce. This will bring increased demand for labor,
| which will increase wages.
| lxm wrote:
| > their place will be other businesses that employ people
| of higher than minimum wage
|
| Worth noting that California's regime extends to fast
| food industry exclusively.
|
| Presumably some of those job losses were absorbed by
| industries still paying minimum wage - retail,
| construction, warehousing, etc.
|
| Presumably if those losses were not absorbed by those
| low-skill sectors, the job loss figure would've been
| higher.
|
| So I guess, as you said, data is conclusive.
| thfuran wrote:
| >in their place will be other businesses that employ
| people of higher than minimum wage.
|
| Why would raising fast food minimum wage create these
| businesses?
| p1dda wrote:
| What do you think happened to the tens of thousands that
| lost their jobs? Are they homeless now?
| delusional wrote:
| I'd hope we could find something more productive for them
| to do.
| tialaramex wrote:
| Also low minimum wages are actually just _corporate_
| welfare.
|
| The gap between what a minimum wage job pays and what it
| costs to scrape by is covered by government or charity, if
| they didn't do that the workers would _die_ , which means
| the jobs don't get done, so that means the resource spent
| by governments or charities as a result of a low minimum
| wage is a subsidy for the employer. Instead of paying what
| it costs they get it for cheaper to create a fiction of
| "employment".
| hellcow wrote:
| This right here. We should demand not to subsidize the
| richest companies in the world. The Walmart family can
| afford to pay their employees a living wage. Instead you
| and I pay for that in taxes, while they extract billions
| in profit and value from their business.
|
| If anything we should be subsidizing small businesses to
| give a more level playing field against companies with
| global economies of scale.
| WarOnPrivacy wrote:
| > We should demand not to subsidize the richest companies
| in the world.
|
| Not without overturning Dodge Bros vs Ford, I believe.
| The ruling created shareholder primacy, the privilege of
| shareholders to have maximum bites of the corporate
| apple. It rigidly protects shareholder (and by ext,
| executive) interests.
|
| The never-ending wealth that flows from that - first buys
| politicians, then officials, judges and (eventually)
| every part of regulation & corporate oversight.
|
| ref:
| https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.
| WarOnPrivacy wrote:
| > what it costs to scrape by is covered by government or
| charity, if they didn't do that the workers would die
|
| I take this to mean the assistance covers the gap to
| prevent death.
|
| I would amend that to note the following: We can exist in
| a state of profound poverty w/o assistance for a very
| long time without dying. Persistent Hunger and crisis-
| level stress kills very indirectly; it commonly takes
| decades.
|
| source: me + 5 kids. a decade of hunger-level poverty in
| a red state.
| inglor_cz wrote:
| This isn't so straightforward. I would argue that they
| have some effect on the customers as well.
|
| In the US, fast food restaurants are remarkably cheap,
| which is probably caused by low wages as well. If the
| workers were paid Danish or Swiss wages, quite a non-
| trivial part of the US population would be no longer able
| to afford a visit.
|
| Now there is a wider question if that wouldn't actually
| improve their health, but that is already a bridge too
| far from the conversation. Miserly wages of restaurant
| workers do make the restaurants themselves more
| affordable to the general public, and the customers seem
| to be content about it.
| roenxi wrote:
| > If it's actually only a 2.7% decline in employment
| relative to baseline then the increase in total wages paid
| would have to be very small to make this a bad policy.
|
| That seems unlikely to be just that though, this study was
| just on the people who lost jobs. If 20,000 people are out
| of a job, there is probably another larger cohort on less
| hours. And we also don't know how much wages rose. The
| people who were fired were the ones who could only justify
| being paid the minimum. The ones who stayed might already
| have been paid more like $17, $18 or $19/hr.
|
| So yes to what you say, but the study doesn't say anything
| about whether total compensation went up or down.
| alphazard wrote:
| It's too soon to say. Increasing the cost of labor will reduce
| jobs in the short term, and increase the cost of fast food. In
| the medium term, that may lead to people cutting back on fast
| food, which then leads to more job loss.
|
| If fast food companies have perfect knowledge of their market,
| then the immediate job loss would be all that happens, but they
| don't so it will take some time to adapt to the new market, and
| see if consumers will bear the increase in cost.
|
| That's not even considering substitutes for labor, which have
| never been as competitive as they are now. AI, robotics,
| single-purpose machines, etc. One negative to a minimum wage is
| that we don't actually know the market price of labor. When
| there is a shift from humans to machines for labor, it will
| happen quickly and without warning, rather than slowly as
| humans become dissatisfied with decreasing wages.
| sroussey wrote:
| Indeed, the positive for increasing minimum wages is that it
| makes robotics and automation more cost effective.
|
| With Silicon Valley being in California, one might think this
| is done on purpose--favoring the automation sector over the
| wage holders.
|
| Once these companies get some scale in California, they can
| then drive prices lower to be competitive in other states.
|
| In the end, sacrificing minimum wage workers in California
| will lead to (generally California based) automation
| companies taking this revenue across the country.
| throwaway4496 wrote:
| Robots will always be cheaper, it is not a matter of if
| they will come, it is a matter of when. That is no reason
| the state should subsidise workers for big corporations by
| allowing them to pay such low income that workers are often
| eligible for social security.
| toast0 wrote:
| Labor reduction in fast food doesn't necessarily look like
| 'automation'
|
| It's things like self-ordering, machines that make change
| (if cash handling still matters), conveyor
| ovens/charbroilers, more centralized food prep, self-
| service and automated beverage dispensing.
|
| Plenty of automation is happening outside of California
| though. Here's an Illinois bases company's blurb about
| beverage automation [1].
|
| Reducing labor in small amounts increases service capacity,
| and in large enough capacity lets you operate a restaurant
| with a smaller minimum crew.
|
| [1] https://dimontegroup.com/projects/cornelius-quick-
| serve-pro/
| barchar wrote:
| It does really disfavor low productivity industries.
|
| Actually, a core part of Sweden's original plan for social
| democracy was to have "solidaristic wage policy" where high
| wage workers would accept a lower wage in exchange for a
| higher one for low wage workers. The idea was you'd both
| squeeze low productivity businesses out _and_ provide a
| windfall to high productivity ones, who could expand
| faster.
| barchar wrote:
| Also, you only really need to cover any increased taxes,
| everything else you pay them is someone else's income (fast
| food workers probably spend almost all their income). So your
| getting a big income increase to people very likely to spend
| it, this creating more employment.
|
| Maybe here this will be offset by decreases in welfare
| program usage and the very, very high effective marginal tax
| rates that creates.
| JKCalhoun wrote:
| Sounds like a net increase then in the money put into the
| California economy. Perhaps that has helped other sectors as
| well -- like retail seeing more money spent in their stores as
| a result.
| hyperman1 wrote:
| One possible reason: People don't need a second job anymore.
| anonymousiam wrote:
| It depends upon how you define "success." I visit California
| regularly, and since the new minimum wage law went into effect,
| I've noticed reduced hours, reduced staff, and increased
| prices. So now my normal breakfast spot isn't open when I want
| to go there, so I eat at home. The places I visit when they are
| open are mostly empty, because the customers don't want to wait
| longer and/or pay higher prices.
|
| So aside from the fewer employees getting a raise, the
| businesses are now under financial stress because of the
| reduced revenue, the customers have fewer options for where to
| eat, and the State of California and the local city/county
| governments will receive less tax revenue from these
| restaurants.
|
| Like most of the other recent California legislation, it's a
| "success" at further damaging the local economy and encouraging
| people like myself to stay away.
| nxobject wrote:
| Was your normal breakfast spot subject to AB 1228
| regulations?
| simoncion wrote:
| Is your normal breakfast spot a fast food joint? If it is
| not, it is my understanding that is not affected by the
| "higher minimum wages for fast food workers" regulation.
|
| If it _is_ a fast food joint... well, I can 't speak for all
| of California, but the fast food places in the section of San
| Francisco that I live (and roam around) in seem to have a
| reasonably healthy amount of customers in them.
|
| Perhaps things are different where you are, but I've noticed
| food getting markedly more expensive, have heard of
| commercial rents getting higher and higher, and have heard
| that many of the folks who would have done waitstaff jobs
| have decided to fuck off for places that were (at the time,
| if not now) less expensive than California. Oh, and there was
| the whole "flight from the expensive cities because WFH means
| that many folks don't have to tie themselves to an expensive,
| small apartment in a city they don't really like" thing a
| while back that gutted the downtowns (and leisure districts)
| of some-to-many big cities because -like- many folks
| exercised their new option to leave and left.
|
| Were it me, I'd consider blaming factors like those before I
| blamed modest increases in wages.
| m000 wrote:
| I can imagine someone using similar arguments circa 1870, to
| complain how the abolition of slavery was a failure, and a
| scourge for the economy.
| inglor_cz wrote:
| From the Guidelines:
|
| Be kind. Don't be snarky. Converse curiously; don't cross-
| examine. Edit out swipes.
|
| Comments should get more thoughtful and substantive, not
| less, as a topic gets more divisive.
|
| ...
|
| Please don't fulminate. Please don't sneer, including at
| the rest of the community.
|
| Please respond to the strongest plausible interpretation of
| what someone says, not a weaker one that's easier to
| criticize. Assume good faith.
|
| https://news.ycombinator.com/newsguidelines.html
| m000 wrote:
| I was just pointing out to the obvious parallel of a
| similar historical event that also affected the lowest
| stratum of human workers. And that what's good in the
| short term for the economy is not necessarily also good
| in the long term (not to mention aligned with what's good
| for the society, or humanity).
|
| > Please respond to the strongest plausible
| interpretation of what someone says, not a weaker one
| that's easier to criticize. Assume good faith.
|
| Practice what you preach, fellow reader.
| inglor_cz wrote:
| The parallel is not obvious. It would be obvious if you
| were talking about people toiling somewhere in South
| Sudan for a dollar a day.
|
| Slavery, the Holocaust and similar tragedies are way too
| painful to be lightly used as a comparison when talking
| about fairly normal and minor economic policy adjustments
| in the richest parts of the world.
|
| Assuming good faith on your side, you seem to be fairly
| tone deaf in this regard. Don't trivialize historic
| atrocities by using them so lightly, it is in bad taste.
| Ray20 wrote:
| But this is more like a return of slavery, not its
| abolition.
|
| It is like when slavery was abolished, someone would
| protest against it, arguing that slavery cannot be
| abolished, since the masters feeds their slaves, takes care
| of them, treats and educates them, and if slavery is
| abolished, the standard of living of former slaves will
| fall sharply.
| DarkNova6 wrote:
| This only makes sense if staffing is a major cost factor,
| which it isn't.
| coldtea wrote:
| And the "decrease in employment" could very well be attributed
| to other factors, like inflated prices and shallow pockets of
| consumers, translated to them skipping on fast food more
| often...
| ugh123 wrote:
| Yes. The paper doesn't go into detail about the wider economic
| effects in the state in business growth, tax revenue, and less
| reliance on public assistance.
| slibhb wrote:
| Maybe a good trade if it was just a loss of employment. But
| there are other downsides...like fewer hours and higher prices.
| forrestthewoods wrote:
| > overall sounds like a big success?
|
| It depends on how many hours were worked. Which the paper did
| not measure.
| croes wrote:
| Are they only looking at the fast food jobs?
|
| Would that be incomplete? Higher minimum wage could cause higher
| employment in other sectors or raise their revenue and wages.
| ethan_smith wrote:
| This is a critical point - economists call these "spillover
| effects" and they're often underexamined in minimum wage
| studies, as cross-elasticity between sectors can lead to
| employment shifts rather than net losses.
| lerp-io wrote:
| unemployed but at least they will live longer lol
| khalic wrote:
| The study is sound, pretty small impact considering the increase
| in living conditions. What surprises me is people arguing that
| somehow a business is more important than livable wages.
| Americans and slavery really is a love story
| thrance wrote:
| That's what you get after decades of relentless propaganda.
| Anything remotely socialist is completely taboo there.
| slibhb wrote:
| "Decades of relentless propaganda" also known as the "the
| 20th century"
| thrance wrote:
| Really clever. Bet you'd love it being a coal miner in the
| Gilded Age. "Hum, no, livable wages are _literally
| communism_ , you wouldn't want to kill _millions_ , would
| you? I'm really smart."
|
| You're exactly what I was talking about. Indoctrinated into
| being absolutely opposed to anything in favor of workers,
| spontaneously regurgitating those same few tired
| "arguments".
| lanfeust6 wrote:
| The poorest people are not the ones working minimum wage
| full-time. However, the poorest do want to purchase take-
| out. Increasing the minimum for fast food realistically
| helps a pretty minute demographic of workers, but the
| carry-over cost to consumers means that poor people can
| afford less fast food.
|
| Maybe that's not such a bad thing, but if it's meant to
| help the poor (who either earn nothing or earn much less
| consistently) it's pretty ineffectual at it, particularly
| when accounting for differences in cost-of-living, and
| the types who typically work minimum wage fast food in
| particular. Walk into a McDonalds and you'll mostly see
| students and immigrants, that's not "the poor". "Livable"
| needn't arbitrarily mean a spacious 1-bedroom apartment
| either, which is why migrants paid below-market wages
| don't worry about rent.
|
| Cash transfers and other schemes are better. We already
| do that to a small extent and could just expand it.
| snapplebobapple wrote:
| 3.2% decline in a year is massive because a year is way too
| short a time to see anywhere near the full effect due to things
| like leases often being for 10 years, technology rollouts being
| slow, etc. On a 10 year timeline i would expect tjat number to
| be much higher. Its a value judgement whether the wage was a
| good idea or not but it does us no good lying to ourselves
| about what that judgement actually cost
| SpicyLemonZest wrote:
| If your goal is to make sure anyone who wants a livable wage
| can get one, you can't just decide you don't care about the
| things that produce them. There's a number of areas in
| California that already suffer from a lack of businesses; you
| may be more familiar with this phenomenon by the labor-focused
| name we usually use for it, "high unemployment".
| stefan_ wrote:
| Amazing how they are all universally experts in economic
| analysis of minimum wage. This thread is a goldmine. If only
| they educated themselves in collective bargaining next.
| nomilk wrote:
| Some things often overlooked in minimum wage discussions:
|
| - Wages often go over or close to the minimum anyway, due to
| market forces, and do so _without_ costly bureaucracy
| /enforcement/taxation/distortion
|
| - Minimum wages make everyone whose marginal value is _less_ than
| the minimum wage unemployable (since you would choose not to hire
| someone for $20 /hour if their marginal value is $15). This is
| disastrous for someone who'd love to work at $x/hour, but who
| lives in a state which legislates a minimum wage > $x/hour, since
| they go from being employed at a low wage to unemployed.
| gibsonf1 wrote:
| The 18,000 people who lost their jobs may disagree.
| ath3nd wrote:
| These 18,000 are most likely employed somewhere else at
| 20-25% wage increase. Note that a different study didn't see
| a rise in unemployment:
| https://www.nbcbayarea.com/investigations/california-
| minimum... which means that these people affected actually
| got a better living standard.
| toomuchtodo wrote:
| _California created nearly one in five of the nation's new
| jobs_ - https://www.gov.ca.gov/2024/08/16/california-created-
| nearly-... - August 16th, 2024
|
| > California's job expansion has continued into its 51st
| month, with Governor Gavin Newsom announcing that the state
| created 21,100 new jobs in July. Fast food jobs also
| continued to rise, exceeding 750,000 jobs for the first time
| in California history.
|
| > "Our steady, consistent job growth in recent months
| highlights the strength of California's economy - still the
| 5th largest in the entire world. Just this year, the state
| has created 126,500 jobs - solid growth by any measure."
|
| This is slightly out of date; California is now the world's
| fourth largest economy as of April 2025, passing Japan. I
| assert the data shows the state does not have a job creation
| issue.
|
| https://www.gov.ca.gov/2025/04/23/california-is-now-
| the-4th-...
| throwaway4496 wrote:
| > Wages often go over or close to the minimum anyway, due to
| market forces, and do so without costly
| bureaucracy/enforcement/taxation/distortion
|
| Yes, when there is an shortage or competitive number of low
| wage workers, not when unemployment rate is approaching 5%
| overall and close to 20% for low income earning bracket in most
| places.
| nomilk wrote:
| That's the virtue of the pricing system! The invisible hand
| means if wages are low in particular profession, it
| encourages looking elsewhere, particularly in professions in
| short supply, whose wages will be high.
| throwaway4496 wrote:
| Yeah, nah, the idea that the problem with low income
| workers is that they're not pulling themselves by their
| shoestrings properly is well and thoroughly debunked.
|
| People don't work in low income jobs because it is the
| easiest option, but because it is the only option often.
| standardUser wrote:
| > it encourages looking elsewhere
|
| Which is why the only rational position of a true believer
| in the free market is to abolish international borders.
| twobitshifter wrote:
| For fast food, the marginal value of an hour of work is a
| measure of how much a business can make from labor and the
| position, not some innate quality of the person. It's flipping
| burgers not rocket science.
| nxobject wrote:
| > Wages often go over or close to the minimum anyway, due to
| market forces, and do so without costly
| bureaucracy/enforcement/taxation/distortion
|
| By "minimum", do you mean "statutory minimum"? I'm not sure
| what the policy implication of this argument would be otherwise
| - an argument against wage and hour enforcement?
| RobKohr wrote:
| So, this cut out the least fit for work. One group heavily cut
| out would be those without work experience such as kids and other
| first entering the marketplace.
|
| Fast food is a stepping stone job, and if employeers have to pay
| more for labor then they will be pickier about it.
|
| Let's think about the reverse. If we cut minimum wage, the sector
| would be much more loose about hiring first time workers,
| convicts, or people just not fit for other jobs. The people could
| grow their skills and contribute more to society, a society where
| low end business constantly complain about how hard it is to find
| skilled workers.
|
| High minimum wage contributes to more people on social safety
| nets living on low fixed incomes because the gulf between that
| and paid employment becomes too great and there is no low wage on
| ramp for them.
| delusional wrote:
| > Fast food is a stepping stone job, and if employeers have to
| pay more for labor then they will be pickier about it.
|
| Why? It would seem to me that there's plenty of room in the
| balance sheets to just pay people more.
| twobitshifter wrote:
| This is a good attempt at a thought experiment but it doesn't
| bear out at all in the evidence.
|
| You need a fixed number of people to run a restaurant, there's
| only so many positions to be filled. You aren't hiring on extra
| people and spending a certain amount on labor, they'll just
| pocket any excess.
|
| You can invest in automation but today that's at a cost higher
| than paying a living wage and with lower service quality.
| JumpCrisscross wrote:
| > _You need a fixed number of people to run a restaurant_
|
| What? Just varying restaurant hours changes labour
| requirements. Menu complexity adds another dimension. Quality
| of service another. Restaurants are highly variable-cost
| businesses.
| twobitshifter wrote:
| Any charts on numbers of gig employees? I see help wanted signs
| at fast food places all the time, but it may be that these
| workers are shifting to gig work.
| tsoukase wrote:
| In Europe the discussion about minimum wage vs unemployment is
| going on since the 90s. The results show that there is a small
| correlation. If the former happens in small steps the latter
| remains stable.
|
| Some greedy employers will lose an extra butter, a few will fire
| someone and all employees win.
| vondur wrote:
| It's still a net loss of jobs. I'm certain the future will
| involve increasing automation to further reduce headcount. A
| McDonald's recently opened near me with no seating, and orders
| can only be placed through the app or at the drive thru. I spoke
| with the owner who mentioned two main reasons for this setup:
| first, ongoing issues with the local homeless population and
| second, a desire to minimize staffing. Fewer employees are needed
| when there's no dining area to clean or counter to staff. I'm
| pretty sure this is the direction things are headed in
| California.
| Squeeeez wrote:
| Where do people eat then? Coming from someone completely
| foreign to such a culture.
| 2OEH8eoCRo0 wrote:
| At home in front of the television while scrolling their
| phone
| inglor_cz wrote:
| This unfortunately sounds like where the trend has been
| going at least since Covid.
|
| People started treating "meeting other people in person" as
| a tiresome chore, and the world is adapting to that change.
| Animats wrote:
| Very true.
|
| Pre-COVID, I used to go to a small kabob restaurant in
| Silicon Valley. During COVID, I'd order from them via
| Doordash. The food wasn't as good cold, though, even if
| re-heated. After COVID, I started going back in person.
| Often, I'd be the only in-person customer, despite a
| steady stream of deliver drivers going in and out. Now,
| they're out of business.
| senkora wrote:
| There's almost always still a parking lot because of zoning
| laws, so you can eat in your car while parked.
| rilindo wrote:
| This does feel like we are going back to the beginning of
| how fast-food started (minus the large crew of people)[0]
|
| [0] https://youtu.be/YqyCaATQPtk?t=74
| standardUser wrote:
| That's the direction every company is headed everywhere. It's
| far more prominent in locales with very high labor costs, but
| once those technologies are easily scalable they will roll out
| everywhere, even places with cheap labor.
| lovich wrote:
| No, you don't understand. If the government hadn't been
| involved, private organizations would have kept employees
| around even when cheaper alternatives exist.
|
| This is sarcastic of course. Ideally if our economy
| distributed rewards across all of society everyone would be
| for changes like this if they did actually speed up
| automation
| morkalork wrote:
| There used to be many grocery and liquor stores that you
| handed in a list of what you wanted at the counter and they
| staff collected them for you from behind the counter. With
| the way stores are locking up items it seems like we're
| steadily returning to that era.
| trod1234 wrote:
| That owner neglects that the latter fuels the former, and gets
| to a point where no business can occur at all (given sufficient
| time horizons).
| 01HNNWZ0MV43FF wrote:
| The owner isn't neglecting it, it's a tragedy of the commons.
|
| If the owner was to overhire, it might reduce the homeless
| population a little, but at great cost. And other businesses
| nearby will benefit for free.
|
| Only large coordination at the level of state or national
| government can afford to implement welfare as a real
| investment in their citizens. If you do it at the city,
| county, or corporate level, it's just charity.
| DarkNova6 wrote:
| I fail to see the causality how this is caused by minimum
| wages.
| CommenterPerson wrote:
| The frail part of the abstract is: "relative to employment in the
| fast food sector _elsewhere_ in the United States ".
|
| In 1992, New Jersey made just such an increase in minimum wage at
| fast food restaurants. Card & Kreuger ("Myth and Measurement")
| analyzed data in _adjacent_ areas in NJ & PA. They found that
| employment in the NJ area actually increased. Take a look at the
| first chapter of "Economics in America" by Angus Deaton (Nobel
| 2015).
|
| Comparing CA to _elsewhere_ in the US (where?) looks a bit shady.
| Given the government agencies are being led by political hacks
| these days, I don 't trust it one bit.
| antonymoose wrote:
| Circa 1992 would the area be increasing in population and so
| employees to service that volume?
| standardUser wrote:
| I would hope so, since if it didn't everything we know about
| economics would be wrong. But this question only makes sense if
| you value all employment equally. If the state lost a tiny amount
| of jobs, and most of those were among the lowest paying, then I'd
| want to know A) what's been the impact on cost of living and B)
| what's been the impact on government welfare spending, before I
| could begin to assess if it was a positive overall for the state
| economy.
| zmmmmm wrote:
| if employment reduced, did the industry contract? Or did it
| maintain its size and make do with less employees?
|
| It's not good for the individuals, but in broader economic terms,
| an industry that delivered the same value with less people is
| effectively increasing productivity which is economically
| generally a good thing. Of course one industry is not a closed
| system, whether those unemployed people go and contribute
| somewhere else in the economy or sink into unemployment is a
| critical question.
|
| If the industry contracted then it's harder to argue it's a good
| thing.
| bluefirebrand wrote:
| > It's not good for the individuals, but in broader economic
| terms, an industry that delivered the same value with less
| people is effectively increasing productivity which is
| economically generally a good thing
|
| Not if all (or the vast majority) of the extra value produced
| is captured by a vanishingly small portion of the population
|
| That is the trend we are following and it is exceptionally bad
| contingencies wrote:
| As restaurants are replaced with robotics there will be severe
| job losses to this sector. Temporary measures cannot alter the
| greater transition.
| Animats wrote:
| FRED (the Federal Reserve Bank of St. Louis), has useful data.
|
| First, all food/beverage hospitality workers in California.[1]
| Huge COVID transient, followed by recovery to almost the pre-
| COVID level. But no further increases.
|
| Full-service restaurants had a similar transient, but never came
| back to pre-COVID levels. Employment peaked in mid-2023, and has
| declined since. Full-service restaurants didn't get the $20 fast
| food minimum wage. But workers there may have tip income.
| California does not have a lower "tipped minimum wage", and all
| tips go to workers.
|
| What FRED calls "limited service restaurants and other eating
| places" shows about the same curve as full-service
| restaurants.[3] This includes both the fast food chains and the
| fast-casual restaurants. If you have to order at a counter, it's
| "limited service", even if they bring out the food later.
|
| So, the part of the restaurant industry that wasn't affected by
| the increase shows about the same trend as the part that was.
| Basically, post-COVID, onsite eating never fully came back. Food
| delivery became a much bigger part of the industry.)
|
| Those stats are regardless of business size. California's minimum
| wage law for "fast food" applies only to businesses with at least
| 60 locations. But it also includes such things as 7-11 stores
| that sell hot dogs and pizzas heated up on site. So, not an exact
| match to the FRED categories.
|
| Overall, the COVID transient and its aftermath is bigger than all
| other visible effects.
|
| [1] https://fred.stlouisfed.org/series/SMU06000007072200001SA
|
| [2] https://fred.stlouisfed.org/series/SMU06000007072251101A
|
| [3] https://fred.stlouisfed.org/series/SMU06000007072259001SA
| wonderwonder wrote:
| As frustrating as it is as an employee to lose hours, customers
| are also frustrated by this as quality and speed are reduced. You
| have fewer employees being forced to perform the same quantity of
| work. Everything goes downhill and then people eat less fast
| food, causing the business to lose income and then reducing
| staffing and the cycle continues.
|
| I avoid all fast food now except for Chick Filet not due to the
| food itself, which isn't great but just due to the terrible
| customer service I get everywhere else.
|
| My kid asked me for McDonalds the other day and for once I said
| yes, we pulled in at 10:20am and ordered 3 chicken biscuits
| before breakfast ended. They of course asked us to park and after
| 15 minutes I went inside and asked what was going on. they
| apologized and said they were out of chicken as they got a rush
| when I ordered and it takes 7 minutes to cook...
|
| its 10 minutes before breakfast ends, I'm pretty confident the
| same rush happens every day at that time. Just such a terrible
| experience. Definitely saying no next time my kids ask for
| McDonalds, its not worth 30 minutes of my life to drive through
| and order a chicken sandwich.
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