A recent investigation by the National Bureau of Economic Research (NBER) has substantiated the concerns voiced by critics regarding California's $20 minimum wage for fast-food workers.
The study reveals that the mandated wage increase is resulting in a reduction of both employment opportunities and working hours for employees in the sector.
Assembly Bill 1228 (AB1228), which was enacted in September 2023 and is set for full implementation by April 2024, was heralded by Governor Gavin Newsom as a beneficial move for workers, businesses, and the broader economy. However, as reported by The Post Millennial, the NBER's findings paint a starkly different picture.
The report indicates a significant decline in employment within California's fast-food industry, estimating a loss of approximately 18,000 jobs. This represents a 2.7 percent decrease in employment, or 3.2 percent when adjusted for trends prior to the law's enactment.
The data, sourced from the federal Quarterly Census of Employment and Wages, underscores how the wage mandate has disrupted the fragile recovery of the food service sector post-pandemic.
These statistics are not merely abstract figures; they represent tangible setbacks for individuals, particularly younger workers and those lacking formal education, who often depend on fast-food jobs as stepping stones to more lucrative careers. The Employment Policies Institute further highlights the impact, noting that non-tipped restaurant employees have experienced an average reduction of 250 working hours annually.
This translates to a loss of approximately $4,000 in income, equivalent to about seven weeks of full-time pay.
Consumers are also feeling the pinch. The New York Post has reported that the cost of a Burger King Double Whopper meal has surged by 12 percent since the law's implementation, and In-N-Out Burger has similarly increased prices to offset the higher labor expenses.
The ripple effects of California's wage policy are being observed beyond its borders. In Washington State, several local jurisdictions are contemplating similar wage hikes. Bellingham, for instance, has already raised its minimum wage to $17.28 this year, with plans for another increase to $18.28 by 2025.
As the debate over minimum wage policies continues, the situation in California serves as a cautionary tale. The unintended consequences of well-intentioned legislation highlight the complexities of balancing worker welfare with economic realities.
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