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?
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.
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.
If the desire is to reverse that trend, the best way to move the needle is to bring housing prices (by far the largest living expense) in cities back down to earth so they’re affordable to normal people again, however that’s best done (probably building more housing, unlike SF which decided to instead prioritize offices and retail, leaving it vulnerable when the pandemic hit).
https://www.5out.io/post/a-detailed-breakdown-of-restaurant-...
That's not exclusive to California - my state didn't have a similar minimum wage law but they have the same changes in their restaurants.
The bad news is, I basically stopped going out because I couldn't rely on businesses being open when I wanted to go.
The good news is, I've lost a lot of weight from not going out.
Feed the location of a business into a trip planner and note every neighborhood within reasonable commute radius. Calculate the average cost of renting a room in these areas and then multiply by three. That's your de facto minimum wage because you have no applicant pool beneath it.
Adding on to this, your competitors in a better financial position are all paying well above minimum. There's probably a McDonalds across the street starting people at five bucks an hour more than you, and they have that wage plastered on a banner right out front.
This study by UC Berkeley attributed a 3.7% increase in food price because of the minimum wage changes. It's quite likely that food overall getting more expensive is responsible for a lot of what you're seeing.
If we can't afford to pay people in California a wage where they can live here, then maybe the economy overall isn't sustainable? A $20 minimum wage is like $2800 take home per month and in many places that can barely cover rent.
If you don't have the money, then you are free to live on a smaller surface area.
How am I supposed to plan my retirement? Plan to leave my home of years, where I have built a life and have all my things? If you think that, you are a sick person and I have to imagine you are younger and only thinking "but I want that nice house, so f*k off old person, take some money and go die somewhere else."
A 600% increase in property taxes over 7 years is an extreme outlier. Zero of my friends or family have ever once experienced such a thing happening.
I certainly am not a fan of how heavy my property taxes are in one of the heaviest taxed cities in the US - but I would absolutely vote down anything resembling something like Prop 13. It's an immoral bit of tax code that favors old people over the young and productive - like seemingly most of our current policy.
I should not be paying a different rate than the young couple moving in next door to me simply because I got here first. The services need to be paid all the same regardless of my age.
> How am I supposed to plan my retirement? Plan to leave my home of years, where I have built a life and have all my things?
Yes, obviously. I have this giant asset called property I can sell and downsize to something reasonable in retirement. Or in the worst case - move. I could also use the equity in my home to pay for living expenses if I must. This was considered normal and expected just a couple generations ago.
This whole "let the old eat their young" streak of society needs to die off sooner than later.
At least when being subsidized by the young via tax rates. The old voted themselves in a benefit at the expense of those taking care of them - it’s not sustainable. They cannot have their cake and eat it too. I say this as someone far closer to “old” than young. I should be paying exactly the same amount as my young neighbors for the same house value. Anything different is immoral at best.
The young productive couple with kids has far more utility being located closer to work and other economic opportunity than a retired couple, so retirees sitting on the most productive bits of real estate is a problem beyond even taxes. That we forced young couples to buy places out in the exurbs and spend hours a day commuting while also trying to raise kids would be laughable to an alien species looking at us from a big picture standpoint.
We have an inverted sense of priorities at the moment - likely due to demographics and voting power. These will rapidly shift as demographics change, hopefully without too much backlash over what we have done to the young.
If we want to make a point that overall property taxes are too high in general I’m much more receptive to that idea. No (residential) property owner should be privileged over another due to age.
Renters have to move all the time, regardless of where they built a life and have all their things, many times because their income is being taken to subsidize people living on large lots (earned income tax is stupid, it’s working people paying for the rent seekers who get to enjoy living and profiting from larger spaces).
Another option is to have multiple kids, and bet that a few might support you in your old age.
Also, I would like to see which region nominal property taxes increased 6x in 7 years. I research real estate all around the US, and I have never seen anywhere close to that increase. You can link to a Zillow link of any random home in the broader region, as they all would have experienced the same rise.
Property tax rates are usually 0.5% to 2.5% of market value, and you would be in very rarified company if the market value of your house went up 6x from 2017 to 2024.
My only point is that this seems like an awful lot of confirmation bias. Something everyone suffers from.
Anecdotally, this also describes how things have played out in the South generally. (Southern states generally have no set minimum wage, so they mostly default to the $7.25/hr set in 2009.) Perhaps this is different in other regions?
I have similarly stopped going to most "fast" food restaurants because the waits are interminable.
This is in states where an hour of minimum-wage labor will not gross you enough money to buy a pound of store-brand ground beef.
It's not the wage.
You may be shocked to learn this, but just because they follow the minimum wage doesn’t mean companies are _actually_ paying minimum wage. Even in my southeastern state, McDonald’s is paying $12/hour. Why? Because there’s no takers, even in a LCOL area, at $7.25/hour! That’s why all this handwringing over the federal is so stupid. Local labor markets will dictate what an acceptable wage is.
BUT in other parts of the state, especially rural areas, there are definitely jobs advertised for < $8/hr. In those areas, McDonald's is paying a premium wage compared to Local Burger Joint. McDonald's pays $12/hr so they can get a higher caliber of employee than Local Burger Joint. Neither pay as much as Perdue.
> what an acceptable wage is
We agree on this, but probably on what factors go into making a wage "acceptable" and the degree to which taxpayers in other parts of the state/country should have to subsidize those wages/owners' profits via social support programs.
(I understand there is a third group of people who don't really care if the working poor are able to eat, but in the spirit of charity I do not assume anybody willing to engage in discourse is in that group.)
The problem with that line of reasoning is that in the meantime:
- unemployment has declined, which means it's harder to find people wanting to work in such a place.
- inflation has kicked in, raising prices over the board.
In that context, attributing the changes you've seen to a particular policy is very very hard (and the linked paper doesn't do a better job than what you do here…).
The government doesn't interfere, it intervenes.
> but the changes in the restaurants were sudden, and coincided with the new wage law.
Says who? Even the paper doesn't claim such a sudden behavior. Also, the paper makes no attempt at estimating the effect of these confounders.
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.
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.
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.
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.
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.
Not every job is the military. Most jobs are in fact not the military. Not qualifying for military service does not render you worthless in the general economy. Furthermore, being worthless in the general economy does not render you worthless in society.
I wasn't qualified for military service in my country, not because of intelligence but some physical conditions. I became a banker.
Ignore the mock outrage of my sibling comment, they are uninformed.
You are absolutely right that some people aren't capable of work valuable enough to pay at least the minimum wage, and in fact there are programs in place specifically to serve these people. The Fair Labor Standards Act allows qualifying employers to hire people with disabilities (including mental disabilities) for less than minimum wage. This is specifically to ensure that employment opportunities still exist for such people, who otherwise could not provide labor worth at least the minimum wage. In some cases, other state programs may pay part of the disabled workers income, effectively the state subsidizing the employment of the otherwise unemployable.
The real problem I think comes from people who are able-bodied and mentally capable, with no legitimate disability, who are just unwilling to take the jobs available to them because it doesn't fit their desired lifestyle (e.g. let them be lazy and keep their hands clean.) Entry level jobs in manufacturing settings have better pay than being a cashier at a burger joint. A first time factory job for a 19 year old highschool dropout with no developed skills but a willingness to show up on time and try hard will almost always pay more than the minimum wage, but finding people who are willing to even apply to such jobs can be challenging due to perceptions of social status and entitlement. These are people who have no legitimate disability but are unfit to work due to their poor attitudes towards working. Our system doesn't accommodate them, unlike people with legitimate disabilities, because the general consensus is those people need to get bitch slapped by reality and man the fuck up.
I think it's more likely (because that's what I'm doing, and I expect others to do the same) that we are rejecting your market based framing, because it unnecessarily restricts good political action. I understand that wage can be viewed through the lens of the labor market, even Karl Marx knew that. I just don't think that's a very important or useful lens to view it through.
It's much like viewing political climate action, or product safety action, through the lens of the "market". You can do it, it's just not very useful for setting public policy.
The "labor market" didn't get children out of the factories, restrictions on that market did.
Lowering the minimum wage for people with disabilities creates more jobs for people with disabilities, demonstrating the whole point. Higher minimum wage price less capable labor out of jobs.
I'd like you to point at the "mock outrage". If it's anything it's very real outrage. Real outrage that this disgusting example of a military IQ test as the decider of the worth of a person, is being perpetuated by otherwise intelligent persons. You cannot point at an IQ test and say "that proves this person is worthless" because the next step for that line of reasoning is eugenics. That's where the outrage comes from.
With that out of the way, I can address your point. A point that's much more interesting than what you're responding to. It's true that there are differences in people's abilities. Some people have mental disabilities, some people have physical disabilities. Those disabilities can affect us in different ways in different tasks. You can't neatly stack people in a gradient of ability, because tons of different tasks require different kinds and combinations of abilities. I think we agree so far.
My problem starts when you then extrapolate that into "for such people, who otherwise could not provide labor worth at least the minimum wage". Firstly you pick the symbolic "minimum wage" which abstracts away the actual value. That implies, at least to me, that you think those people would be unable to provide "labor worth the minimum wage" no matter what the minimum wage was. That obviously silly, but I'd encourage you to fix that with a number.
Secondly, and much more importantly though. I think that your argument reveals a skewed sense of value. My argument is not, and was never, that there can be no difference between what peoples abilities. My argument isn't even in this case that disabled people should be paid if they had no disability. My argument is instead that paying somebody able, less than the cost of a parking spot in New York City is ridiculous. The core of my argument is that the normal wage should be so high that the potentially reduced wage for disabled people would still be above $20/hr.
The outrage you're detecting isn't at the revelation that disabled people exist. It's that we are discussing paying real people actually working $20/hr as some sort of unreasonable expense.
That way they aren't "dependent on government aid". They get to work for a fair comparable wage, avoid having to deal with too much additional paperwork, and don't have to be constantly faced with a stigma of being worth less. They are treated equally, and the employer gets to handle their crap on the back end.
It's not some insurmountable gotcha to drag people with a handicap into the conversation.
Condemn?
You mean take care of the least among us, which is, as many have observed, a KPI for a just society.
And so in your ideal world, if they can make a positive contribution, just not enough to live on, we can let them live on the street? Having a "Let them eat cake"[0] moment, are we?
Who is to say that folks being subsidized because they don't have the means or wherewithal to support themselves can't make a positive contribution?
Does that contribution have to be that they mop floors, clean toilets or flip burgers?
Perhaps they might contribute positively to society in other ways, just perhaps not those that have monetary (and ones that don't allow them to pay rent or eat healthy at that) rewards?
You know what's humiliating? Living on the street. Rooting through garbage cans to find food to eat. Having to listen to wealthy, entitled folks tell them they're worth less than everyone else and that they should be happy that they're "contributing" to get scraps from their tables. Forcing those with nothing to jump through hoops just to feed themselves and their children. Those things are much more humiliating than getting a helping hand to make ends meet so one can have a roof and electricity and maybe even food.
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.
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.
Why would raising fast food minimum wage create these businesses?
The primary effect of these types of laws is that businesses that employ fast food workers are less profitable, and thus when they compete against other businesses for a given lot, will bid less for the land. If the marginal buyer changes, it would have to do so to a business that relies less on minimum wage fast food workers.
I recently had the mayor of a major west coast city tell me this was a permanent trend, that there was no way to reverse the loss of these small businesses and that the disposition of all that real estate was a major issue, compounded by a loss of basic neighborhood services like groceries that used to operate out of this real estate.
The future isn’t other businesses that somehow magically pay higher wages. The future city planners are seeing is all delivery all the time from warehouse districts, and ghost towns of commercial real estate for which there is no purpose. Even city centers are starting to turn into suburbs in terms of occupancy density.
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".
If anything we should be subsidizing small businesses to give a more level playing field against companies with global economies of scale.
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.
Meanwhile, all raising wages in the current market does is implement a wealth transfer from businesses to landlords with minimum wage workers as the mules transporting the money.
If you let the housing supply remain this tight and just increase wages, you just bid up rents and make the most economically vulnerable fight over the insufficient supply of affordable units.
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.
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.
A big Mac is still 5 eurodollars.
Requiring companies to pay more than value added by an employee simply fire those workers.
The purpose of govt is to provide assistance, and perhaps training, so those on min wage can gain experience and skills to move up.
Min wage is merely an entrance wage into jobs.
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.
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.
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.
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/
> 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.
Those are things that were previously being done by people that are now being done by machines. In other words, automation.
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.
Maybe here this will be offset by decreases in welfare program usage and the very, very high effective marginal tax rates that creates.
Will I still be allowed to hunt for food?
Society is something better encouraged than gamified.
They will decrease on their own if people think about where to get food, and not about extra money for the lottery.
> and maximum stock investments as well?
No, there are no restrictions. Any amount of investment. But there are only government's stocks and the terms of return on investment are determined by the government
> Will I still be allowed to hunt for food?
Only deep in the sparsely populated provinces. To avoid armed rebellions.
> Society is something better encouraged than gamified.
You'll be surprised at what methods encourage people best.
Read the biography of Korolev, who sent the first satellite and the first man into space. A case was fabricated against him, he was sentenced to 10 years in a gulag, but after a year he was transferred to a prison for engineers, on the condition that he will be a very effective engineer.
And he was. The results of such encouragement were amazing and almost unachievable by any other methods.
Oh boy. You've missed the glaringly obvious. They only did this because they couldn't pay him. In other countries that paid their engineers they produced more and better products. History is clear and obvious on this fact.
> You'll be surprised at what methods encourage people best.
There's very little surprise when you study the actual science of human psychology and performance and not the journals of demented cold war generals.
Anyways, thanks for being honest about wanting to create a Company Scrip Town, I and many others, of course, will never cooperate with you. You're right to fear rebellion.
But they could. But no amount of money will encourage an engineer as much as the need to escape the gulag. Especially if you add some variety to their experience by staying in the gulag.
> In other countries that paid their engineers they produced more and better products.
It is precisely for this reason that the overwhelming majority of engineers in the USSR were not threatened with the gulag for inefficiency. And many believe that this is a good thing, and that "efficient" engineers threaten to destroy the labor market entirely.
> History is clear and obvious on this fact.
Yes. The Soviet space program created by Korolev is the pinnacle of human engineering thought, only God is above it. History is definitely clear and obvious on this fact
> I and many others, of course, will never cooperate with you.
That's the best part. You will vote yourself out of economic freedom, and then there will be no reason to ask about your opinion. Just look at the trends and public opinion on the necessity for economic freedom. You are already in checkmate if you look a few moves ahead.
Turns out economics is actually more difficult than "higher minimum wage is good/bad".
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.
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.
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.
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.
More money in employees pockets means more jobs and more disposable income, after all.
It's a 25% higher minimum. It doesn't mean everyone was making the minimum before the law. Certainly not all were. (It would be interesting to know actually how much the wages went up on average.)
Also, do we know if prices went up? Because that could have a negative effect on the rest of the local population.
Second, the effective wage increase for fast food employment was actually quite a bit lower than 25% since several large municipalities had higher minimum wages and not all fast food restaurants were affected.
Third, employment appears to still be dropping.
https://mises.org/mises-wire/racist-history-minimum-wage-law...
It depends on how many hours were worked. Which the paper did not measure.