Will I still be allowed to hunt for food?
Society is something better encouraged than gamified.
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.
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.
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 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.
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.
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/
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.
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).
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.
> 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.
Slavery, the Holocaust and similar tragedies are way too painful to be lightly used as a comparison when talking about 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.
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.
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.
It depends on how many hours were worked. Which the paper did not measure.
Would that be incomplete? Higher minimum wage could cause higher employment in other sectors or raise their revenue and wages.
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".
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.
Edit: should clarify, it's a balancing act because a higher main wage on net can be beneficial, but after a certain level will lead to undesirable effects
- 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.
> 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-...
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.
People don't work in low income jobs because it is the easiest option, but because it is the only option often.
Which is why the only rational position of a true believer in the free market is to abolish international borders.
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?
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.
Why? It would seem to me that there's plenty of room in the balance sheets to just pay people more.
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.
What? Just varying restaurant hours changes labour requirements. Menu complexity adds another dimension. Quality of service another. Restaurants are highly variable-cost businesses.
Some greedy employers will lose an extra butter, a few will fire someone and all employees win.
People started treating "meeting other people in person" as a tiresome chore, and the world is adapting to that change.
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.
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
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.
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? everywhere?) looks a bit shady. Given the government agencies are being led by political hacks these days, I don't trust it one bit.
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.
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
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
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 at 10:30am. 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. There were a grand total of 4 employees in the store sitting at a busy intersection with a double drive through line and an indoor eating area. Just utter lack of management and employees and customers pay the price.
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.
roenxi•12h ago
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•12h ago
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•12h ago
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•11h ago
unnamed76ri•11h ago
skippyboxedhero•11h ago
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•11h ago
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•11h ago
“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•9h ago
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•11h ago
Now if they pay the teenager half the wage the same adult is doing then someone is getting a raw deal.
timbit42•4h ago
mc32•12h ago
Now, for many that’s okay. People just have to be okay that that happens.
Also, now those people affected have no wages.
ath3nd•11h ago
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•10h ago
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•4h ago
mc32•4h ago
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.
fzeroracer•19m ago
“It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country." - FDR, who signed for and pushed for the initial minimum wage legislation in the US.
It's really sad to see people repeat this take which is historically completely false.
tialaramex•13m ago
This is, generously, misleading. In Norway for example the statutory minimum you can pay somebody in a particular sector like fast food will be negotiated with a union for that sector.
relaxing•12h ago
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•11h ago
lanfeust6•50m ago
toomuchtodo•24m ago
> White women and Black or African American women have the highest rate of earnings at or below federal minimum wage, at 1.5% and 1.4% of hourly workers, respectively. Among all groups reported, Asian men have the lowest share at 0.5%.
skippyboxedhero•11h ago
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•11h ago
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•7h ago
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.