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.
Similar patterns in Seattle, many once popular sit down restaurants are now empty and only serve as sources for delivery. Huge buildings with dozens of tables sit empty.
Wow here in Spain it's nothing like that. We still go out for dinner a few times a week (especially around lunch time when most restaurants have a 3-course menu for €12-14)
I once read somewhere that franchise or investor-backed restaurants in the U.S. were often categorized by AOV per diner, with menus tailored to hit these targets: Pre COVID it was $10 (quick service restaurant/QSR aka "fast food"), $20 ("fast casual" like Chipotle), $50, etc.
Customers are really turning against the ever-increasing price of going out to eat, with the perception that quality isn't improving. Tipping is another issue that really rubs people the wrong way.
It's a joy to visit countries like Spain or Taiwan or Japan where costs to eat out are very reasonable, quality is good, tipping is nonexistent, and you don't feel like you're being hustled out the door to improve some cold turnover metric.
We used to eat out a lot. COVID changed it. What changed? We were forced to really learn how to cook properly, then we saw how much money we were spending eating out, and how much healthier and to-our-taste we could make our own cooking.
When things went back to normal, the prices to eat out had jumped so high, it simply wasn't worth it. $15 of fast food to feed both of us turned into $35-40. A $45 dinner out at a restaurant (taxes and tip included) turned into $60-75 meal. Tip expectations had gone from 15%-18% to 20-25%. Add beer or wine or a cocktail and we're instantly at a $100+ night out.
At home $10 of protein, $5 of vegetables and other ingredients and a good youtube video with a recipe, $15 bottle of wine and we were all set.
One of the biggest shifts in pricing we've seen is Chinese restaurants. Entrees that were <$15 before are now around $20 or a lot more for fish dishes. It's not unusual to have an $80 takeout bill.
Lunch specials fortunately are still under $15 at our favorite places, but only on weekdays.
Oh here prices haven't really gone up that much. A 3 course menu would now cost 12-14€ where it was 10-12. An entree from takeaway would be €5 or so.
The only exception is Uber eats. I notice that most takeaways charge more than on the local takeaway app (Glovo). Probably because most tourists don't know Glovo they are used to spending more.
I'd normally never use Uber (we also have a local alternative for the ride service called Cabify) but I got a free Uber one promo so I tried it out. But with the higher pricing the free delivery is so not worth it.
$14US in Seattle will barely get you a side of fries. A popular place near me (not fancy!) lists their pretzel+dip appetizer for $17US, or €14.50.
With these prices, restaurants and eating out in general has become completely inaccessible to a huge swath of people. And even for those who can afford it, it’s a less frequent treat. It has a noticeable impact on the liveliness of the city and the social vibe, from my experience.
This has been long-term problem for Seattle. I moved here after Portland where the restaurant culture is fantastic. Food is wonderful and inexpensive in Portland so I enjoyed going out. Here in Seattle, it's prohibitive and the quality to cost curve is bad so I make delicious inexpensive food at home.
Seattle seems to have its own particular issues (somewhat shared by SF in my experience): there's no longer any compelling reason to go to downtown. There are plenty of reasons to avoid downtown. Restaurants in Woodinville seem very busy. Similarly restaurants in Sonoma are also very busy. I think the customers went elsewhere.
Online shopping has removed some proportion of the reason people would visit a city downtown. Remote working has removed some proportion of the reason people would be in a city downtown. There has to be some unreproducible draw to get people to go to a city: The Vatican/Mona Lisa; food and culture not available elsewhere, etc. Conversely the city has to be not a s.hole.
Portland, too. The neighborhoods are doing OK, but downtown still feels empty.
It’s interesting to me that it hasn’t depressed commercial real estate prices all that much. Rents are still crazy expensive, with many vacant storefronts and even entire buildings along the light rail lines. The market forces around commercial real estate seem disconnected from reality in a surprising and unintuitive way.
Still, downtowns can be cyclical. NYC in the 70s is a prime example. The days of Taxi Driver are long gone. I guess the question is what stimulus needs to be applied to kickstart the turnaround process.
I’m far from a commercial RE expert, but I know they do tend to have very long leases. That would make it less responsive to sudden changes like 2020 and the subsequent changes
There was never a reason to visit DT Seattle outside of Pike Place Market. The restaurants there if anything have gotten better over the years, I'd say a decade ago most of them closed after lunch because everything catered to office workers.
> In unadjusted data from the Quarterly Census of Employment and Wages, we find that employment in California's fast food sector declined by 2.7 percent relative to employment in the fast food sector elsewhere in the United States from September 2023 through September 2024.
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.
I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area. (We actually have a fairly robust program that provides housing for folks in need). We have one fast food restaurant in the area and it's a McDonalds. It was one of the main hangouts for folks in the area. We would have weekly meetups there. After Covid, they closed the seating area and installed the touch screens. They went from employing around 7 to 9 folks down to only 3 and talking with the franchise owner, they're not planning to ever hire back up and re-open seating. He did mention that the gross revenue is way down, but net revenue is about the same and his stress in managing the location is way reduced with the headcount reduction and simplification of the business.
But on the other hand... Some people open cafes specifically because they dream of creating a place for the community to hang out. At least that's what they say. I often see McDonald's fill that niche for older folks.
That can all be trivially fixed by style of seating and tables, removing all power outlets and so on. People who don't go there to work won't care.
I live in the country with probably the highest sit-down cafe density cities in the world (Korea), and this issue has been figured out ages ago. If you know any such cafe owners who don't understand how to deal with this, I'm happy to have a chat with them. Or they can come over here and I can show them a dozen cafes so they can see it with their own eyes.
You simply set up the cafe to accommodate the exact % of such laptop users as you're comfortable with, which can be 0%, 100%, or anywhere in between. If you do for some reason want to run a cafe where 100% of seating is usable for laptop workers, then the way to keep it all profitable is also straightforward: 1. you make your cheapest coffee (converted to Dutch CoL) 7+ euros a cup (use some single origin stuff that's still cheap when bought from wholesale). 2. As food, only offer small sweet bites and make those similarly overpriced. 3. Make the seating dense so you can fit a lot of these office workers. Bar seating is especially space-efficient for this.
The Netherlands even has an advantage; people can't just leave their setup on the table and leave for hours as it may well get stolen - this is not an issue in Korea so some people actually do this, the worst case scenario for cafe owners.
The $10 comfortable folding chairs that recently became available changed the equation for me. Rather than sitting in a cafe, I much prefer to take my laptop and a chair and go sit in a nice park, on the beach, or even in the woods.
The common non-tourist behaviour in a café in Vienna is to sit there talking for hours, buying a few cups of coffee total. It has been like that since before laptops were a thing. Yet the cafés remain viable.
> Some people open cafes specifically because they dream of creating a place for the community to hang out
Having people sitting alone looking at a laptop for hours while buying the minimum amount of coffee needed to not be just flat out loitering, I think it would be a problem both from a cold business perspective, and even more so from the human perspective.
I think it's pretty common today though. There are a number of cafes with a lot of seating where I see a whole lot of tables with someone seated working on their laptop.
Cafés as a place to be for cheap where the weather can't reach you while you read the newspaper you can't afford or a book or plan a revolution is quite old. Like centuries old, perhaps millenia if you count gossip and include inns.
Like i think the intended path here is that taxes pay for a library, a park, or a community center. Having random businesses create hang out spots out of the goodness of their heart is not the intended path. They can if it makes sense for their business, but community needs should be primarily funded through taxes not business charity.
Would make sense, your reasoning, if they actually paid taxes. Unfortunately everything is very broken on that front, labor pays much higher taxes than corporations, the richest don't pay taxes at all, and the shortfall is plugged by cutting public services and issuing debt on what remains.
The comment thread is about a McDonalds franchise owner. They are not going to be committing Apple-level tax evasion. They will be paying taxes like everyone else.
> I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area
This is a common observation and should make more people ponder: why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
> why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
May I suggest the book Progress and Poverty by Henry George https://www.gutenberg.org/ebooks/55308 that asks almost the same question. The answer is that private land ownership allows landowners to capture economic growth of prosperous places, so wages barely cover rent at the margin. This is particularly relevant to California which passed a disastrous constitutional amendment Proposition 13 (1978) which slashed property taxes from around 2% to 1% and declining, especially for older estates, which is pretty much the opposite of the ideal policy to deal with the problem of rising rents.
I think two factors - high productivity leads to high cost of living, which means people without labor skills have a hard time making enough money for food and shelter.
But ALSO - these areas tend to lean towards higher levels of social services such that they have much higher homeless shelter / services / etc per capita.
So while many people may go homeless in place, certainly there is some homeless migration towards areas that actually provide food/shelter and don't harass/arrest them/chase them away.
I'd suggest high local wealth and economic productivity tend to correlate strongly with increased housing costs.
People move there for the jobs, and the ones who do have jobs tend to have relatively well paying ones, so can pay more for housing. But the ones who don't have a well paying job are in trouble...
Like everyone else, homeless people tend to have ties to specific areas, and by the time you're homeless you tend not to have the capital required to move and restart someplace else.
Basically at what point do you decide you're "failing" (no moral valence intended) in one area in which you have a support network that you're willing to risk moving to a totally new area and starting over? At that point, do you have the resources required to do so successfully?
I live in Boulder and homelessness is a big problem here. Some people tie it to housing costs, which I don't buy. There are nearby towns with housing that is substantially cheaper, within a 30 minute bus ride if you really need to get to Boulder for some reason.
And how good is that support network if it leaves you camping in a tent down by the river? I'm not taking about moving across the state, just down the road a bit.
>There are nearby towns with housing that is substantially cheaper, within a 30 minute bus ride if you really need to get to Boulder for some reason.
That's great! But if you have no place to store your clean (or dirty) clothes, or to shower, how many landlords are going to rent to you? How many employers are going to offer you a job?
You're talking about getting out of homelessness, I'm talking about not becoming homeless in the first place. It's not like rent increases happen overnight
You said "I live in Boulder and homelessness is a big problem here...And how good is that support network if it leaves you camping in a tent down by the river?"
Nope. Definitely not talking about homeless poeple. Gotcha.
I have an interesting observation about homelessness.
I live in a country where the average household makes about US$6000 a year.
The cost of living here is about 1/2 of the USA, with rents about 1/4. The unemployment rate is about 5%.
Homelessness is very, very low (to the point of near invisibility) and mostly limited to illegal immigrants.
The thing that seems to make homelessness a non-issue here is the tolerance of ad-hoc construction. This leads to neighbourhoods where construction is really low cost / quality, but people are housed.
I don’t really understand why these neighbourhoods don’t devolve into hotbeds of violent crime as I would expect them to in the USA, but they mostly don’t.
Mostly, the construction tends to improve over time, and the neighbourhoods often gradually metamorphosize into more contemporary and inviting areas with vibrant small businesses and elegant homes.
I often wonder if it’s cultural, as poverty is not seen as failure but rather a temporary condition to be transcended as possible?
Doesn't Dominican Republic have like a 50% higher homicide rate than the US? Or do you mean it's just not localized in the spots you'd expect it to be?
Yea that's why I was wondering if GGP was talking about specific areas. There's certainly cities in the US with eyewatering violent crime rates (St Louis, Baltimore, etc). Not sure if OP was specifically talking about a similar localization within the Dominican Republic.
Idk. IMHO the crime exposure here is pretty insignificant if you aren’t going to the tourist hotspots. At the touristy places it’s about like NYC risk wise.
It’s not high for a developing nation. since 2015 the average is about 13/100k. By comparison, Louisiana is 19, New Mexico is 14, Missouri is 13, Maryland is 11, Alaska is 10.
? Not sure what this is supposed to mean. I’ve lived here for over a decade and have seen very few people that don’t have a home of some kind. Family connections obviously play a large role.
You're swapping cause and effect. Places with lots of economic opportunity and significant public services to assist the homeless are the place where you can have large homeless populations, ie large numbers of people just barely scraping by. Decrease the money flowing in and the population will go down, because they would no longer be able to survive. Those who can will go elsewhere, you can imagine what happens to those who can't leave a place where they can't survive. One must be very careful using "number of people observed with a particular symptom of the problem" as a proxy for how well the problem is being handled.
There's still money in those places to support people even if it's not flowing through public services. Many homeless people work, and it's easier to get work in high productivity areas. Most of those who don't rely on generosity from people who do.
Touch screens have been around for a long time. Just like the situation on the upper end with AI: I don't think it's the technology, people are actually getting worse at socializing (creating stress for the people responsible) and so socialization is becoming more expensive and opportunities for it are becoming more rare.
My general observation is that a lot of self-service wasn't super-popular pre-COVID. But, now, it's become more entrenched and a lot of people just grumble and deal with it while a lot of stores made the investment and accept the (probably overall) reduced cost even if customers don't love it. My local DIY home store doesn't even really have regularly-staffed full checkout lanes any longer.
Often advocacy groups or municipalities will perform counts on specific days each year.
So while one does not need to say "literally" in that sentence (it wasn't figurative, after all), it is possible to say "zero homeless folks" as there may be data backing the statement up.
Yes- I live in a pretty affluent Los Angeles suburb and we recently just hit "functional zero" street homelessness.
"To achieve Functional Zero, the number of individuals placed in interim or permanent housing must be greater than the number of individuals who become homeless over a six-month period, and the homeless population, as a whole, must have a median duration on the streets of less than 90 days."
The data is gathered by the city as well as local nonprofits.
People like to think that employment is pretty much the only good that does not result in a mismatch of supply and demand from a price floor.
Take for instance a proposal that says "no one is allowed to sell their used car for less than $10k". Maybe the justification is poor people are desperate and sell their car too cheap and all these dealerships and buyers are a monopsony underbidding the real value of the car, profiting off these uninformed, unorganized individual sellers.
Does anyone think this is a good idea? Would anyone bother reading studies contemplating the effect this may have?
No, of course not. Everyone knows that this would essentially mean many cars that would have sold under $10k would just not get sold. Sure some people would benefit, maybe getting a higher price for their car. Some things would shift, maybe people would opt for scooters or e-bikes or something.
But I wouldn't want this price floor if I was on either side, trying to offload a bad car or buying one.
The cost of employment is not comparable to the cost of a particular good. Employment has much more complicated implications on the economy and on society. A minimum wage is set in part to prevent a desperate race to the bottom, and to (try to) ensure something approaching a living wage. It’s a blunt and often ineffective tool, but viable alternatives are scant. The free market won’t solve this one any more than it solves the problem of healthcare.
Interestingly, minimum wage seems to be more likely in places with weak unions.
In places with strong unions, there is often a de facto, negotiated minimum at least on a sector by sector basis instead.
E.g. Norway has a roughly 50% unionisation rate, and no minimum wage in most situations, but most sectors are covered by negotiated agreements between the unions and employer organisations.
Humans have certain fundamental maintenance costs. $100/hr vastly exceeds maintenance. However, if you pay below those maintenance costs, then society effectively picks up the tab via other social costs and programs. For instance, if employers don't provide healthcare, then we either pay more for emergency medical treatments and other publicly-subsidized healthcare programs, or we accept being a country with a bunch of people dropping dead at age 40 of entirely preventable problems.
This is very different from most other goods, because no one really cares if you break your chair, the chair's parents didn't spend 18 years of their life on it, etc.. If you break a chair, you bear the full costs of replacing it.
Also, the full cost of replacing a human is vastly higher than the maintenance wage.
It would be more efficient to pay someone market rate, have needed work get done, and subsidize their existence than to try and offload that cost onto employers.
Exactly. Minimum wages are an attempt to solve economic redistribution policies by obfuscating the cost to employers rather through the tax code, which is the cleanest way to achieve the goals of broad based prosperity.
It also has consequences like increasing the attractiveness of substituting capital (i.e., automation) for labor or simply leaving some work undone (e.g., many smaller restaurants in CA are going out of business due to multiple government policies, including very high minimum wages).
Why would it drive wages down? The less desperately that workers need a job (due to universal basic income), the more they can demand, assuming they also have skills that fill the employer's need.
The trick for this to work is that the UBI has to really cover a lot of basic needs.
Overall, this works better for lower skilled workers than it does for higher skilled and higher paid workers. But it could also make sense for people staying home to raise their children, a job which is not compensated today.
The alternative is that certain types of work simply do not get done, as shown by the article. That means if you care about providing for these people you'll now be responsible for shouldering 100% of their cost as they sit around unemployed.
Is it? Minimum wage is a pretty simple law, compared to the paperwork and bureaucracy of existing welfare programs. I suppose you could go with Universal Basic Income, but I'm not convinced society is actually ready for that one yet.
How would such a program even work? If we say the Maintenance Wage is $15, is the government just paying the difference between that and the market rate? If so, it seems the ideal salaries to offer are $0 (let the government subsidize it) and $16+ (but you could just get two $0 workers, so I'd expect pay scales to really start at more like $30?)
This seems like it rapidly descends into Bureaucracy or Communism
Just because a law is simple does not mean it's efficient. We are talking about the total value being produced. But if you want simple, something like a negative income tax would be simple and decently efficient.
>However, if you pay below those maintenance costs, then society effectively picks up the tab via other social costs and programs.
No, that doesn't hold because humans need these "maintenance costs" regardless of whether they're working or not. Therefore it's fallacious to claim that such "maintenance costs" stem from the job itself. It's a sunk cost arising from the person existing in the first place.
Exactly why healthcare should be just one more part of the standard social contract. We the people should collectively pay (single payer) for everyone to have the required basic healthcare in bulk, without the stress of billing, collections, etc.
Same idea as police, fire, basic education. We want a properly educated, health, safe workforce. That's the basis of a healthy, productive, strong society.
> Real question: If government-mandated wages are good policy, why not set the minimum wage to $100/hr?
Because min wage policies have a cost and a benefit. The benefit only happens at relatively low numbers (enough for basic necessities). After that point you dont get more benefits but the costs still increase.
Is a three-bedroom house in [pick nicest neighborhood in any metro area] a necessity?
How about a one-bedroom apartment in the same neighborhood?
An in-law unit (e.g., "granny flat") on a farm just outside town?
A room in a six-bedroom co-op house where meals are collectively prepared and shared?
Same could be asked about food, clothes, etc. I can buy used clothes for $5 or new ones for $100.
"Basic necessities" is woolly term that in practice is full of paternalistic value judgements. Every individual has a variety of resources to draw upon that would make them willing/unwilling to work a job at a given wage.
A government-mandated minimum wage means some people who could find employment will not because their output do not exceed the wages the government has declared must be paid. In practice, it also means many people starting out in life or who are less skilled never get the chance to be hired and learn new skills that increase their pay.
Minimum wages remove the lowest rungs on the job ladder that often teach skills required to be successful higher up.
It is still useful to ask the question just so we know the answer. I admit the person asking in this case probably didn't mean it this way... :)
On speed limits, when it comes to road deaths, you get people saying "one death is too many" and so on when one of their loved ones die, even when speed limits are set to 20 mph.
These people are wrong. Asking why a 1 mph limit is bad can help reveal that we do put a cost measured in lives on convenience, and we do face the risk of death when driving a car, and everyone has a number they think is reasonable.
Asking why $100/hr is too high can at least help us decide on a quantitative way to decide on a number rather than just guessing.
Another reply already addresses your question about speed limits, which is another great example through which to examine these questions.
"Reasonable" is a completely subjective standard and not a good way to run a complex economy with an infinite combination of job seekers and providers.
Who gets to decide what is reasonable has big real world implications for millions of people. Get it wrong, and as we see in California here, people lose their jobs and businesses close all because some politician or bureaucrat (or misinformed voter) thinks they know better than workers and employers what the correct price for labor should be.
Your question can be applied to literally any market intervention with a grey area. If housing code is good policy why not make all houses 10 times as strong?
It's the same question, really. If we make housing too expensive to build through stricter codes, then housing won't get built and at some point (e.g., last decade in California discussed in the parent article), the homeless population increases and people/businesses decide to relocate because the math doesn't work.
I don't think a full look at the history of minimum wages will be kind to their supporters. Minimum wages were created by labor unions for the sole purpose of excluding other workers who are more productive or less expensive than their members[0].
Going back further, labor unions were created during the railroad boom by racist white workers to exclude Chinese laborers who were 2x more productive for the same price. Instead of responding to competition by getting better, American railroad workers formed labor unions and lobbied politicians for relief, culminating in the Chinese Exclusion Act [1] that forcibly expelled 400,000 Chinese immigrants and led to some horrific violence and racism towards Asian people in this country.
In all cases, the role of government should not be to mandate wages or prices or anything else that markets are better suited to establish, or there will necessarily be higher unemployment. Governments can help by establishing some health and safety standards and policing abuses, but when it comes to accomplishing the social goals that minimum wages intend to, that's better done through tax policy and income redistribution (e.g., guaranteed minimum income, earned income tax credit, welfare benefits).
You still didn't address the idea that there is a threshold for all intervention. You said "why not make $100hr minimum?" and the answer is "that's too high".
It sounds like, were you to acknowledge that thresholds exist somewhere for most things you think the threshold for minimum wage is 0 and that UBI and guaranteed services is a better mechanism.
Which is respectable, at least in that you recognize a government role in ensuring humane living conditions for its citizens. Most people who argue against a minimum wage seem to think any government action of any kind to protect or provide for citizens is "theft by taxation".
Ah sorry I was taking you seriously when you said "real question", I didn't realize it was a rhetorical device. The history of the minimum wage is pretty irrelevant compared to the economic models and empirical studies in that article, I'm not going to engage in such a pointless distraction. If the Nazis invented building codes I would still support them based purely on whether they are a good idea or not.
But you seem to be missing my point on housing code: do you support a nonzero housing code? Some is good, too much is bad. Same for minimum wage, many models and analyses show that some minimum wage improves productivity and counterintuitively increases employment in monopsonistic industries up to the point when they (partially) undo the damage the monopsony caused, at which point obviously a further increase in minimum wage causes damage as you say. My point is that your "real question" (which was an argumentative point in disguise) works rhetorically against nearly every intervention, some of which you certainly support (I tried to pick an obviously good intervention and came up with building code), and thus is a weak argument. If you truly support no market interventions I at least respect the internal consistency of your worldview but think you must underestimate how much food poisoning, fire death, servitude, etc it would cause.
I think the solution here is to have you work at a fast food restaurant with a salary just low enough not to be able to eat at the end of the day. There really is no substitute for experiencing first hand what it is like to stack 500 burgers on an empty stomach then telling your kid there wont be any dinner today. Imagine some land whale exploding over her 7th burger not approaching perfection closely enough and that it seems you are not taking the issue seriously enough.
In contrast, if one earns enough to live a normal life they instantly change into one of the best regular customers. One can make a career out of flipping burgers and have a long term [professional] relationship with them. If they are indeed overweight give them a salad on the house and have them explore the many delicious healthy things on the menu. Delicious because one gets room to think about improvements when not drowning in bills. An eating disorder usually comes with above average knowledge of the culinary realm. Should make an interesting conversation.
Where do we see a desperate race to the bottom? People leave if there's too much competition / low wages in an area. At least in America where the people are nomadic.
People forced to move because of low wages is a societal negative. High population churn disrupts communities, worsens local governance, and causes atomization.
Suppose a town forms around a coal or gold mine. Then the mines dry up, or demand for what they're mining dries up. There are no jobs and no reason for people to live there any more.
If this community ceases to exist, is it a societal negative? And further, will a high minimum wage speed up or slow down the decline of this community?
Viable alternatives are many when you look at minimum wage closely and see that it is, in essence, welfare funded by a regressive (even more so than usual) sales tax: businesses will pass most of it to their customers, and the fraction it in good or service sold is broadly inversely proportional to the price of that service. That is, people who buy the cheapest stuff - i.e. the poor - are those who are disproportionally taxed, as percentage of their overall spending. So it's taxing the poor to feed the poorest.
The obvious alternative is to tax the rich to feed the poorest. We can start with capital gains.
Most arguments for minimum wage solutions are better served by UBI-style solutions tied to having a job somewhere. People show up to work to benefit society in some way deemed valuable by someone who put a much larger investment in play (maybe tie to some really small minimum wage like $2/hour just to make sure the business owner really does deem the labor beneficial), but the vast majority of the worker's income comes from wealth transfers from the wealthy (via UBI) instead of from the working classes (who are the vast majority of clientele at places like McDonald's).
Prevent a desperate race to the bottom? Ensure something approaching a minimum wage? Nobody cares, so long as they're getting a UBI check from the government.
I don't disagree with you and think that UBI and universal health care are better alternatives. However, there is a much easier path forward to getting higher minimum wages and we shouldn't stop making incremental changes just because there is a potentially better solution that we will probably never implement.
The price mechanisms of supply and demand are very well understood since the 1800s, and apply to anything that's bought and sold, including labor. 150 years of solid science.
When facts conflict with beliefs we hold dear and perhaps define our identities, our brains are very skilled at finding ways to keep believing what we want to believe.
Especially when the facts define your in-group. Changing such beliefs, makes you one of the people you and your friends hate. The mind will convince itself of pretty much anything to avoid such social suicide.
This comment is weirdly heavy on lecture and light on substance. I'm going to ignore the second two paragraphs and just stick to the first. The person you're replying to says that labor is different because it has more complex costs to society aka an externality. Your rebuttal, as far as I can tell, is "nuh uh". I can think of a very simple externality - low paid workers are supported by the rest of us via social programs. Goods that require similar support from the rest of us (cigarettes for example) should also be regulated because it breaks the economic magic that makes efficient decisions and allocations. We have known about these basic (literally econ 101) flaws for almost as long as we've studied markets.
I am open to being convinced by either you or OP but your argument is failing to do so.
My claim is just that wages are prices which arise from the same supply vs demand dynamic as any other price. This important truth is sadly very controversial, which I think is really damaging to society.
Of course, I can't prove that from scratch in a HN comment. What I can do is point out that in the science studying this, it is an uncontroversial fact.
I know, you can think of an externality. Trust me, Economists can also think of externalities, far more than you or me. In general, they just add interesting nuance to the supply/demand model. They don't completely invalidate it.
But I can't easily demonstrate that, so I suspect I have not changed your mind.
I'm not the poster you replied to but I appreciate your clarification. However, I still don't understand your argument. I don't think anyone has argued that supply and demand don't apply to the labour market. However, it seems that you do agree that there are externalities if workers are paid extremely low wages. Is your argument that the government shouldn't put in laws to mitigate or prevent those externalities? Are you saying that minimum wage laws don't actually address the externalities and should be removed? Are you trying to promote other solutions to solving those externalities? If so, what are they? Is there some other point you're trying to make that I'm completely missing?
Many people argue that supply and demand don't apply to the labour market!
Often because they're not even aware of the concept. The more sophisticated claim that it doesn't apply to the labor market.
The minimum wage discussions are dominated by this view.
The supply/demand analysis is simple: If a worker has skills worth $12/hour on the labor market, and the minimum wage is $15, that worker will be unemployed, making 0$/hour. They'll also not learn new skills, since they can't get a job.
Try bringing that up in a minimum wage discussion, and you'll be called many nasty names. Often equalling market wage to human worth, which means you think the poor are lesser humans. A few sophisticates will bring up vague externalities arguments, as if they negate the whole supply/demand concept.
From my perspective minimum wage laws is one of the main factors keeping people in poverty, but that concept is impossible to even explain to most people.
My main thought about externalities is that they their effect is usually minor, and can be ignored. Many of them are also positive. For the bigger ones, it's a case by case analysis.
Is the externality you're thinking of something around the government paying money to the working poor?
That's a strawman. I don't doubt that you've read these things that bother you so much that you bring it up in unrelated discussion, but to the extent serious people critique supply and demand, they don't say it doesn't apply at all (literally all things have supply/demand curves) but that the market distortions in our concentrated economy lead to suboptimal outcomes for society and that the simpler market model (in econ 101 you learn this model is optimal under many assumptions including "perfect competition" that is rarely true of the real world) is an incomplete model of reality which leads to the wrong answer. If you're going to argue against anything please argue against a serious point like one found in an introduction to the topic such as https://en.wikipedia.org/wiki/Minimum_wage and characterize it fairly. If you don't understand this graph then you aren't ready to debate the topic https://en.wikipedia.org/wiki/Minimum_wage#/media/File:Monop...
To demonstrate that this is a strawman, I will parrot back what that basic wikipedia article provides as a critique of your point: often in the real world that $12/hr number you provide is depressed by a one-sided monopsony (few large employers vs many small employees, a fact known as market concentration that has grown stronger over decades) and minimum wage can provide effectively a mega union against it to put it simply. When a market is dominated by a single entity what is something "worth"? You may say whatever the market will bear but in noncompetitive markets that is absolutely not the most efficient allocation of resources for the broader system. If insulin were a complete monopoly would it be worth $1M/vial because a billionaire would happily pay that much to save their life? I use the extreme to demonstrate the concept of market failure to you. By pointing out monopolistic forces am I saying "supply and demand don't apply"? Maybe in a way, but putting it that way is reductive and unproductive for our collaborative search for the truth in this discussion.
Or, for a totally separate but less abstract argument, say someone has no skills except for an ability to dig a ditch at $5/hr - it is low value because you could pay someone $50/hr to rent and operate a trencher and be 100x more productive at less total cost and a better overall outcome to society (I think these numbers are probably roughly reflective of reality), but this low skill person is unable to run that trencher. Is it better for society to "learn new skills" as you say by digging ditches for years? They probably would get a bit stronger but obviously never get close to the trencher's productivity or bang per buck. This is an exaggerated toy model but it demonstrates the point that many sub-minimum wage gigs teach negligible skills compared to formal education. I point this out just to object to your example - many people turn to education if possible when they fail to find employment, so to say sub-minimum wage employment will teach them skills whereas unemployment will be worthless just doesn't map on to most people's experience in the real world and to be frank sounds out of touch.
History has already shown that the free market will reduce wages to the point of slavery and destitution. Minimum wage laws are very important to counter the psychopathic greed of many company management.
Labor isn't just another good, it is actual human beings whose wages greatly affect their quality of life.
The predictable end game of unregulated free markets is the opposite of freedom for 99.99% of the population.
There's a curious authoritarian tinge to these "free market" argument. "Free markets are powerful, therefore if I support free markets I am a powerful insider."
It usually takes an encounter with a major economic reverse - like being bankrupted by healthcare - for proponents to realise that the free market doesn't care about them either, no matter what they believe.
Minimum wages are an economically imperfect (as you've pointed out) but politically possible way to put some downward pressure on much, much bigger failures of our species and society to have attitudes and policies around acceptable minimums for basic human needs that are even logically self consistent, to say nothing of enlightened.
We can't quite get it together on saying "food, shelter, healthcare are human rights" or it's sinister sibling "we'll let you die in the cold if there's no profit to be had from you".
Those are both consistent, actionable policies, but no one wants a consistent policy on this because everyone gerrymanders it dofferently.
So we get clunky hacks like minimum wage that are sort of the average of Aspirational Star Trek and Aspirational Blade Runner.
Hate to boil this down to the basics, but I think it’s pertinent here. You’re comparing human beings working to survive to used vehicles. Even removing the complete lack of reckoning with basic humanity, the basis of your analogy is a ridiculous starting point to argue from. The value of an asset is not in any way analogous to the value of labor.
> You’re comparing human beings working to survive to used vehicles.
You could flip this and say "you're comparing people who are selling off an essential possession just to survive to a bit of company work."
The way people frame things in completely different ways to justify their preexisting beliefs is part of the reason why it's difficult to get people to consider other possibilities. The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. A person might just be getting rid of their used vehicle, or they might be giving up an essential possession because they're in dire straights.
People sell something to survive (their labor, their goods, etc.). It doesn't mean that every single transaction they make is for the sake of survival, or that external actors are a better judge of what their prices must be.
In college I would often make some extra spending money by partaking in social science experiments. I didn't really care if the compensation was below minimum wage - I had time, it was easy enough, and it was easy to opt in when I could. I wasn't doing it for survival, but for a bit of extra spending cash. If someone forced them to significantly increase wages, I might have benefited, but it's far more likely that they would done fewer experiments with a more select group and I would have been worse off.
If someone is on the edge, and it's only a minimum wage job that they have open for them, California's minimum wage could help them if they're one of the lucky ones who benefit from it, or could hurt them if they were one of the people hurt by the loss of 18,000 jobs it caused (per the linked report). A policy that leads to fewer jobs that pay more tends to just increase inequality.
It's a typical thinking of someone who read "Econ 101 for kiddies and libertarians" and never got the rest of education that explains all the ways those pronciples aren't as simple as descibed. And how people aren't interchangeable with cars.
Except that every company's wages is another company's revenue. Healthy consumer economies depend on consumers actually having disposable income, but this is becoming increasingly less and less true in the US.
It's an interesting point, but it's the closest thing to guaranteeing a minimum return on a person's work and preventing downright slavery that we have.
Well, employment and taxes are special because they can increase the propensity of people to spend. So, yes, they don't obey whatever idea of "supply and demand balance" uninformed people get from the news.
We absolutely do have laws that are the equivalent of “no one is allowed to sell their used car for less than X".
These laws take the form of transfer and registration fees for vehicles, taxes, and especially inspection requirements. We also have much stricter requirements on what a large commercial enterprise can sell versus a private individual.
We have rules like that for everything. We also say you can’t sell houses for less than X by mandating things like how many stairwells they have, and so on.
To the extent you’re tempted to argue some semantics about how you could still sell a car for a dollar you’re wrong and missing the point on purpose by arguing over the definitions in a way that doesn’t change the principle.
We do this because we are a society and we get to decide what the society looks like. Prices are downstream of our value system.
That's a terrible comparison. As a society we want cars to be cheap. A race to the bottom for cars is a good thing. The cheaper the better.
We do not want a race to the bottom for wages. If full time employment is not enough for basic necessities, that is the sort of thing that leads to riots. Society in general does not want that. Society prefers stability.
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.
There used to be many grocery and liquor stores that you handed in a list of what you wanted at the counter and the staff collected it for you from behind the counter. With the way stores are locking up items it seems like we're steadily returning to that era.
All grocery stores were once like that, before Piggly Wiggly invented the "self service" model of grocery store in 1916. It could turn out that the self service model is ultimately a historical oddity of the 20th century.
It's funny how old things become new. From the late 19th century (and in declining amounts all the way up until the 1980s), people in the US routinely would order things from the Sears Roebuck catalog and have them delivered. Local merchants used to complain about how this was taking their business. Of course ironically, Sears got out of catalog sales in the 1990s, shortly before e-commerce took off.
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
The government does have an effect, though. If a company is avoiding automation because automating things is expensive, a big jump in labor costs may speed the process along. If you push a bunch of companies to automate, automation becomes cheaper for everyone.
From what I can see, it's pretty much a bad thing all around. The business would have had more money if it had hired someone, and there would have been a job available to someone who needs it.
The other thing that will probably happen is a reduction in service. Cashiers get replaced by ordering kiosks, for instance.
There are times and places when service is greatly reduced because the work force is tied up in more profitable employment. Such as working in factories instead of doing butler type jobs.
One way of forcing this is making the minimum wage high enough that any venture has to make sure their workers have a high output. And some types of businesses become inviable as a consequence. Investment which would have gone to such ventures will instead go to other ventures, and workers become available for better jobs.
In quite a few industries, companies are very reluctant to risk $$$$$ on developing new automation (which might not even work, and even if it does work might not be cheaper)
Why spend $$$$$$ developing a drone delivery system that might face insurmountable technical hurdles like range, capacity and safety if you can just pay undocumented migrants on bicycles $2 per delivery?
Its not at all imo. Franchised businesses are not in the habit of employing low skill workers as a public service. This data is interacting with both covid effects and infrastructure upgrade/rollover - in other words, it takes a while for companies to adopt affordable touch screen ordering systems and its been phased in at a ton of non-fast food (at least in my area) over the same period of time. Local health grocery store has touch screen ordering at their deli, as well as simultaneously going cashless. Most coffee shops too. Look at most international airports - almost all the kiosks have one or no attendants now.
The causality is raising the minimum wage pushed business to do this sooner rather than later. this is why, as per the study, California lost more jobs than states that didn’t raise the minimum wage
> 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 personally know a couple of Uber Eats restaurants whose only physical presence is literally a garage in a residential neighborhood, and they only take orders from the app. I also know of a Uber Eats competitor whose business model includes rider hubs that stock on a limited set of high volume products for quick delivery.
I wouldn't call them net loss of jobs per se. I see those as entirely different businesses with completely new business models. It's more a kin to ordering groceries online than to going on a night out.
I just can't understand McDonald's long term strategy. I can either go to them or to a locally owned burger place near me, and spend about the same. Waiting times are the same, and every other metric is worse at McDonald's. I went to McDonald's last week because I haven't been there for over a year and well, I won't be going for the next few years again. If they can't compete on price, speed or taste, they only compete on location and/or their current customer base. I just don't see how that is a viable long-term strategy.
McDonald's main value for me is consistency: it might not necessarily taste great, but it tastes roughly the same everywhere. There are better restaurants, but there is a greater probability of finding a McDonald's because it has more locations. McDonald's might not be the best choice, but it's usually a great fallback option if you are unfamiliar with the area.
I guess I'm a minority but when I generally dislike McDonald's but one of the reasons I continue to go there is because they often employee so many people from different demographics. It's been a redeeming quality trait of theirs. They give young people a start with work experience , 20-40s some managerial experience and sometimes elderly people a job too.
Once I'm just ordering a shitty burger from a machine, I have probably lost any reason to give them my money at all, there is just way better alternatives.
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.
I have always preferred to sit in my car to eat at a park or some relatively peaceful place in the shade without too much activity. Sitting in a big dirty room with a bunch of people watching me eat has never been comfortable.
I agree. I can listen to a podcast in my car, there's no chance someone will cough or sneeze near me, etc.
My first time being into a McDonalds since I was a kid was earlier this summer when I gave my 3 year old the option of going in or staying in the car. I was pretty shocked at how barebones it was now. There weren't even napkins available and none with our food...which, when you have a kid with, is an issue.
> “meeting other people in person” as a tiresome chore.
Someone linked the short story The Machine Stops by E. M. Forster the other day where this is an element. A character makes a big deal of having to meet her son in person, opposed of through the machine.
Written in the 20s, gets a lot of things uncannily correct for a society 100 years later. Video calling, silence/do not disturb mode, notifications, air conditioning, people no longer wanting to look at real things with their eyes, etc.
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.
>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.
Because DoorDash/GrubHub/UberEats/etc. charge the restaurants more than their gross margins. In such an anvironment, unless a restaurant raises prices 25-30%, they're eventually going out of business.
I'd say that these companies are most certainly not providing 25-30% value add. Rather, it's just leeching off restaurants and their customers.
It's disgusting and has killed many, many restaurants where I live (NYC), even though we already had a culture of delivery before these parasites came along.
This reminds me of the Sonic fast food chain. The first (and so far only) time I've visited Sonic was some years ago, I was staying at a motel across the street, walked over there to order, and was surprised there was no place to sit or even a normal counter to order at. The ads they run on TV give no indication that Sonic is strictly a drive-thru operation.
We need to detach from the "jobs at any cost" mentality behind your first sentence.
By that logic ending child labor is "still a net loss of jobs."
I mean, here you are talking about a business owner having issues with the local homeless population who are homeless because their jobs don't pay enough to afford housing.
All these business owners race to the bottom paying their employees scraps and then wonder why they have empty dining rooms with no customers to afford their products sold at record-high profit margins.
Obviously, minimum wage doesn't really fix the economy on its own, but it is a very important tool in a toolbox for ensuring that capitalism is restrained from following its worst instincts.
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?
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.
Is your usual breakfast spot a location with more than 60 locations? The minimum wage increase here only applied to chains with more than 60 locations.
A lot of what you're describing is nation-wide. Food is more expensive everywhere. Cost of living in California is up significantly. Rents for restaurants is significantly higher as well (at least anecdotally, my wife's family restaurant has to close because they doubled the rent after their lease was up, I have heard this is incredible common).
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.
A better example would be Los Angeles and the new $30 per hour minimum wage for hotel and airport workers. Conceptually it makes sense. The crux of the issue and some opposition is there are more people now who use those jobs for primary income for a family, where in the past it may have been perceived as jobs for supplemental income and no health benefits.
You are correct that I was unable to summarize an incredibly complex tangled web of economics, sociology and politics in a few hundred words on a forum. I don't think any of us can do this. Of course it's an oversimplification. Is the comment I'm replying to also not doing this? Are you also not doing the same thing?
My only point is that this seems like an awful lot of confirmation bias. Something everyone suffers from.
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."
The price is the price. Maybe you shouldn’t have eaten avocado toast so much and saved more for retirement?
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.
Old people should not be prioritized over the young.
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.
Letting some old person stay in their lifelong home is not the old eating the young. Kicking that old person out of their home literally is the young killing off the old.
Old people don’t need to monopolize real estate the way they have over the past 40ish years.
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.
This comes across as if you want people to work for your convenience but without paying for it. You are not obligated to the output of other peoples' work. The subway isn't open that early? It wasn't cost effective to pay the people according to that store based on the amount of business they got.
You are utterly dependent on complex supply chains and would find it extremely difficult to continue to survive if something ever happened to most or all of those chains.
It is rich of you to support a law that interfered with one kind of supply chain and then to lecture someone who gave a detailed description of harms that probably are effects of the interference.
Although it is true that a person is "not obligated [you meant entitled] to the output of other peoples' work," that does not mean that enough interference by ham-handed governmental policies won't make everyone significantly worse off -- because we all make extensive use of complex chains of economic transfer.
It's been a long time since I worked in the SoCal fast food scene, but it's been decades since it was true that a majority of the workers were students.
> I've noticed reduced hours, reduced staff, and increased prices
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.
> Southern states generally have no set minimum wage, so they mostly default to the $7.25/hr set in 2009.
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.
That's great, I live in a HCOL area in a Southern state and McDonald's here also pays higher than federal minimum.
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.)
> since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices.
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…).
Most of those in favor of the government interference cite the points that you made. They don't really ring true though. Inflation has slowed, but the changes in the restaurants were sudden, and coincided with the new wage law.
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.
I’d point to savings-driven relocation as well. It’s why some suburban towns have seen an increase in number of restaurants even as options in cities decline.
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).
Restaurants have a lot of competition, and low margins. Like any other employer, they can offer jobs at low wages (or at least could, until the government got involved). People are under no obligation to accept a job with low wages, but some do. By definition the employees are not slaves, because they can quit at any time.
Employers offer wages that the labor market will bear. Some jobs are mostly unskilled labor, and the pay is appropriate. Restaurant workers get tips, and I am usually very generous. Apparently tipping has become much less popular lately.
Notable exceptions to skill vs. wages include things like the Longshoremen in the Port of Los Angeles, who belong to a union that extorts the shipping industry. There is no justification whatsoever for the high salaries they earn.
> People are under no obligation to accept a job with low wages.
This is the wrong premise you are basing your entire conviction on.
When you don't have an alternative to working then it is not a jobmarket as you are not in a position do not transact.
This is the same reason why the housingmarket is not a market the second people do not have alternatives to buy into overpriced rents.
A free market requires that participants can decide not to transact. A pro-market government makes sure that this is is the case to a reasonable extend.
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.
You need to factor rent increases into your thinking, both commercial and residential. Your breakfast spot is a business that no longer makes financial sense to operate.
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.
If everything you wrote above is true (and I have no reason to believe otherwise), then the labor market should self adjust to the local economy and the government shouldn't need to step in and dictate a minimum wage.
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.
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.
> 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.
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".
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.
> 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.
Have you actually looked at what Walmart pays? Even in areas where the minimum wage is still $7.25, they're paying nearly double as a starting wage. They raised their starting wage over $10 in 2017 and have consistently raised it even where they're not legally obligated.
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.
> 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.
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.
No, it's not corporate welfare. Min wage hikes mean those workers unable to add that much value don't have jobs anymore, are left out of a workforce and thus cannot gain skills, and now require actual welfare.
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.
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.
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.
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.
If one of these fast food places shuts down, it's not like the lot is just going to sit vacant forever.
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.
That isn’t what’s happening. A lot of these areas are permanently hollowing out far beyond fast food, at least with respect to local businesses. Lots of places in decent neighborhoods are boarded up and stay that way. This is an issue even in some cities with strong population growth.
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.
Sure, but this has nothing to do with the land values which are still extremely positive. It has everything to do with Prop 13 allowing speculation. Repeal Prop 13 and all of those lots will be better cared for and rented out.
> 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.
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.
> 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
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.
The problem is that people don't understand that it's a market that determines wages, and instead think it's a number that employers just come up with off the cuff and minimum wage is the only thing stopping them from picking $1/hr.
Right. They also fail to understand that many low end jobs only provide very marginal value to companies and could easily be eliminated if the minimum wage exceeds that value. For instance, baggers at grocery stores hired as a convienence to shoppers and to speed up checkouts. But this is only very marginal value; customers and cashiers can do the bagging themselves and the negative side of that is only very slight to the business. It's an easy job to eliminate first, many stores these days don't have one. Low minimum wages create more jobs like this, which are good jobs for teenagers or people with intellectual disabilities.
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.
Don't you think it's a little unlikely that people, in this day and age, with the current political climate in the west, don't "understand that it's a market". I think it's extremely unlikely.
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.
> Ignore the mock outrage of my sibling comment, they are uninformed.
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.
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.
There are a significant number of people with developmental conditions such as Fetal Alcohol Syndrome or Down's Syndrome who, realistically, are never going to be capable of generating $20/hr of economic value. The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.
Where I live we solve this in part with state sponsored offsets in wages. If you hire a person with a medically diagnosed handicap, you get some of the wages back from the government.
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.
I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.
>I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.
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.
A better approach would be to increase the Earned Income Tax Credit to help those people rather than distorting the labor market by increasing the minimum wage.
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.
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.
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.
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.
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.
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.
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.
"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.
I disagree that increased employment and increased labour always makes the pie bigger. If minimum wage was low enough, we would decommission our cement mixers and use a human with a shovel instead. But that's not an improvement. Automation is happening, jobs can be replaced right now. The problem is that humans are too cheap to bother automating, and that the profits of the automation are not being distributed to the displaced workers.
Paying more for less is never a positive change, it's an inefficiency that is costing someone and resulting in less goods for society. It's a net loss. That money paying for less is now not being spent where it was before, making that place lose out.
Well, on the other hand, it can be seen as something like a eugenic program to cleanse society of those unworthy of the state. After all, there is nothing stopping them from going to work somewhere else where there is no such minimum wage.
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.
If they could get higher paying job they would already do so. No legal immigrant dreams of working at McDonalds. No illegal immigrant would be employed by McDonalds.
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.
> 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.
> They only did this because they couldn't pay him.
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.
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.
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.
> Small decrease in employment in exchange for ~25% higher wages for those employed?
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.
First, 2.3 to 3.9% decrease in fast food employment in a year isn't really small given only a fraction were affected by increase.
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.
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.
One issue with a minimum wage is there isn't a great economic theory for what it should be. So even if this one had good effects, it doesn't mean $25 per hour would also have positive effects. It's also possible a personally beneficial outcome was a net-negative.
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...
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.
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.
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.
That also goes for other fields as well. I've seen enough comments here on HN from people who thought their employer would offer them a Sillicon Valley wage if they moved to the middle of nowhere to live like royalty, often because they thought companies pay them based on how much value they add, especially when WFH became more widespread during COVID.
All companies pay people as little as they can to keep a certain amount of employees of certain quality around to do the work. The fewer options you have (or the more options your employer has), the worse the deal you'll have to accept becomes, and the lower your pay will be.
As for skills, I know plenty of people in IT who would go crazy working retail or interacting with customers within a month. Flipping burgers may be the easy part, but resilience against customer behaviour and monotonous/uninteresting work isn't something everyone has.
There is a huge difference in the quality of workers in fast food. Some people are slow. They are inefficient. They let things burn, they count change slowly, they are clumsy. They can't multi-task.
It is cognitively simple for you, because you aren't thick. But for people of well-below average intelligence, flipping burgers and doing something else at the time is just not possible.
> 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.
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.
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.
I used to be a true believer in the free market and I did want to abolish international borders to enable free trade of labor. What I didn't realize though is that nobody wants to require immigrants to pull their own weight and exclude them from social welfare if they're unemployed, etc. If you had a very free market country with no social services that would be overused by unrestricted immigration, then yes, an open boarder might be a good idea. Perhaps this is similar to internal borders in China, which are reasonably open but immigrants from other provinces aren't eligible for social welfare and effectively have to go back home if they lose their job.
> 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.
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.
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
The marginal value being too low is just the company being bad at optimizing. Yes, contrary to fairy tales, companies are not so good at this because internal politics and/or poor management.
My country switched from 39 to 35 hours maximum working time per week, some years ago, in order to reduce unemployment (we are talking about around 25M workers). The net result was that companies did not hire more people (or less than expected), they figured out ways to make their working force more productive.
> This is disastrous for someone who'd love to work at $x/hour
This does not exist, period. If x is below the cost of housing and eating in the area, it's not worth working, or it is a last ditch job that delays dying on the streets - that's the reality we are talking about. I am pretty sure that the minimal wage they set is just above that, unless I missed the memo and California became socialist.
> The marginal value being too low is just the company being bad at optimizing.
not really.
If there's a job for cleaning the sidewalk of a joint, or for holding up a sign, but this marginal value is very low, then a minimum wage greater than this value will prevent this productive work from being done (or it'd be done by an existing worker, at the sacrifice of some other productive work they _could've_ done). There's no way to "optimize" this.
Personally i am not a fan of minimum wage. I rather have tax payer money spent on creating valuable workers through training. There's lots of models for such programs - for example, an apprenticeship model, where a firm pays for the cost of an apprenticeship (which includes wages as well as cost of training), in exchange for an agreed upon number of years of employment at an agreed upon fixed wage post-training (they cannot quit or will have to pay back the cost of training for example).
> Personally i am not a fan of minimum wage. I rather have tax payer
Tax payer?
> in exchange for an agreed upon number of years of employment at an agreed upon fixed wage post-training (they cannot quit or will have to pay back the cost of training for example)
Well I've heard of such model once, a scam school used it for what basically was forced labor. Thankfully the contract was nullified by a court. It's not surprising to me, as I have heard too many stories of harassment and abuse at work.
There's not even a need for that, normal programs such as part-time school, part-time work paid half the minimum wage already exist in my country and are generally appreciated. But they exist mainly for skilled work only, such as engineer positions.
The issue is that you don't need much training for sidewalk cleaning, so "innovative" programs won't solve anything. What is needed is to push back against abusive practices caused by the imbalances of the worker market. Companies are predatory by nature.
> 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?
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
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
Living wage is a NIMBY problem, not a wage problem.
It's like thinking you can solve a GPU shortage by giving people more money to buy marked-up GPUs. That won't do anything except make GPUs even more expensive.
The solution is to build more GPUs. To build more housing.
EXACTLY. I've been saying the same thing for so long. As long as the imbalance of supply and demand exists the way it has, giving the lowest wage earners more money only bids up rents. There is no such thing as a living wage in a system of scarcity where buyers compete for necessities instead of necessity owners/producers competing for buyers.
I mostly agree with you but I do think the issue is a lot more complex than that. I do think there is a valid criticism based on market power abuse at the minimum wage in the food sector, for example, especially with the rise of chains over the last several decades and with labor markets at the low end being much more geographically constrained than most analysis of this situation appreciates. In my opinion there is a kernel of truth to the wage should be higher than minimum in many places if the market was functioning properly and had stronger competition but I kind of doubt that's more than a couple dollars and that is being used to push through bad leftist policies to push wages of their special interest groups up when their other policies are highly inflationary in the costs of basic needs like housing as well, which actively harms these people. it would probably help the low end a lot more having policy that generally pushes down the costs of basics (like getting rid of most of the zoning/approvals processes for building anything so people can build whatever fits the economics of the area on whatever land they want in areasonably short period of time, removing carbon taxes, sales taxes on basics, etc).
We've seen with GPUs that building more doesn't solve the problem. Large corporations buy up all the stock and the leftovers are still ridiculously expensive.
Unless there's something preventing the rich from treating supply as an investment to get even richer off of, increasing production only facilitates wealth collecting at the top.
That's not true. You are seeing a massive bubble in AI infrastructure unfold that is gobbling up gpus faster than we are increasing supply of gpus. That bubble will pop at some point (probably soon) and things will get more normalized int hat market too (unless that pop coincides with something really stupid happening like China invading Taiwan, which would take out massive amounts of production capacity)
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”.
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.
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".
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.
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
If unemployment insurance and state fmla pay are any indication, any cash payments will be driven into the same laggy rough to navigate bureaucracy by the coalition between the people who like being cruel to poor people and the people who think insurance is some kind of handout.
That doesnt follow. We already have welfare/handouts and it idnt hard to navigate, some people just need guidance doing so, which is available. 90% of people living on the street have a) a bank account and b) a smartphone
You also need an address that isn’t a P.o. box or a post office. Everyone I’ve talked to who has gotten unemployment or welfare compares keeping it to a part time job.
I find it weird how people care so much about employment overall rather than sufficient employment. Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government. Which is to say it's a job that shouldn't exist. While I don't think minimum wage is really the ideal mechanism of determining this, it's obvious that paying somebody federal minimum wage is an immoral exploitative joke... But also it'd likely be even worse without it.
But more to the point, why do these people obsessed with work and jobs always think anything that creates any kind of job is "good" no matter how bad, dangerous, or poorly compensated? Jobs that amount to licking poison for nickels in a country where you we could probably quarters the lowest currency denomination without issue somehow being "good" for the lockers is ludicrous. Low wages have massive negative externalities for society.
> Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government.
So should a teenager, just entering the workforce, should be paid enough to support a family?
I’d rather sacrifice a living wage for the opportunity of upward job mobility, that’s the metric I really care about. It’s not the job you start with that matters, it’s the job you end with, and how long it takes to get there.
I don't think people expect one income to support a family anymore. Two working parents has become the norm for all but the highest earners.
But yes, two teenagers may very well need to support a family. All it takes is one broken condom and being born in the wrong place at the wrong time.
There's not a lot of upward job mobility for most people. We can't all be CEOs. Even if that teenager has aspirations for a bigger career, they'll have expenses like college tuition, books, and travel.
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
Having lost a job suddenly, any employment is better than none. A perfect job that provides everything you need is pretty far detached from "this is sufficient", or even "this will slow my fall while I work something else out", and this kind of bitter resentment towards anything less than a job that pays out an idyllic American existence is what causes them to be priced out by legislative fiat like the minimum wage.
More to the point, not every skill level or job is _worth_ that kind of compensation (as uncomfortable as it might be to entertain), and attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages' -- which are as much a system of slavery as gravity or magnetism, and just as resilient to ideation.
> More to the point, not every skill level or job is _worth_ that kind of compensation ...
This is a fair stance to take, but you need to accept the consequences of the stance when people get desperate.
> attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages'
A population of people who can not feed themselves are going to kill you on the street for the canned tuna you might have in your bag.
> Having lost a job suddenly, any employment is better than none.
While this is true for you it is not true for the society as a whole.
This entire comment seems be written with a complete disrespect for macro dynamics and taken right out of a hunter gather society.
It completely ignores everything modern governance - and it is quite frightening.
In catastrophic circumstances perhaps, but the metric for actual starvation in the US is so low that finding a solid figure is difficult. Malnutrition, while higher, seems strongly correlated to child/elder abuse/neglect, and not homelessness. Street muggings for nourishment by a starving underclass is a fantastical and disingenuous narrative. And, surely, you see the dissonance in suggesting that poverty leads to crime, while also suggesting criminalizing low-wage labor?
> While this is true for you it is not true for the society as a whole...
Why isn't it? What about using the legal, practical market means at your disposal is exclusive to some privileged section of society, and why does it include me and nobody else in hard times?
Your 'rebuttal' is just a broad, dismissive gesture to theory and platitudinous insults.
I agree everything people might want done isn't worth the cost of having a human do it. But I don't see why such jobs should exist. I also don't think the base level of welfare needs to "idyllic," but enough for everyone to act as good citizens without being trapped in cursed doom cycles of impoverishment.
In general, though, it wouldn't matter what the minimum wage is if everyone had a sufficient level of general welfare without working...
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
You find it weird people don't want to starve? It may feel weird to you in your ivory towers but people still want to live no matter how demeaning their life gets.
Jobs are a product of the economy. In the end their prices (wages) move with market forces. The only way you deal with scarcity is by increasing supply (i.e. boosting industry), but alas there's always "intellectuals" like you sneering down on it as if people should just choose to die instead.
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.
> 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.
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.
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?
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.
Sweden does not have a minimum wage but does have strong unions which negotiate wages on behalf of workers.
Norway has minimum wage for some sectors (including unskilled labor), these minimums are also due to strong unions and collective agreements which have become law.
Denmark, no minimum wage but strong unions and collective agreements.
Finland has no legal minimum wage but also collective bargaining mandates minimum salaries.
All of these countries have strong social security nets.
> None of the Nordic countries have a minimum wage
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.
> Never was minimum wage equivalent to a living wage.
“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.
The whole idea doesn't make any sense. One person's "living wage" (the one with 7 children) is another person's luxurious lifestyle (the one in a DINK marriage)
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.
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).
Does that apply to all of the VC backed companies that are losing money? How many companies in CA that are paying minimum wage have the ability to be sustained for years by investors?
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.
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.
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.
> 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.
"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.
In Europe we manage to pay fast food workers pretty well, including 5 weeks of paid vacation. Minor part timers earn a bit less but still good. And people can still afford burgers.
Fast food places have to compete with strong unions jobs like grocery stores as well.
> Of course you can offer an easy life when you are burning reserves and ignoring the future.
You mean burning calories and looking forward to pension age? The first one Americans need more of, and the second one, sadly, not many Americans live to see.
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.
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.
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.
typical bootlickers response to deflect from uplifting lower class people. Either move it to crying illegal immigrants or they already have enough with social welfare lol. It's amazing how you'll defend top 1% getting tax cut's when we need a small part of it actually help avg. person's anxiety of not living paycheck to paycheck.
Decades of tax cut's for top financial class did not workout of everyone else, the extra money did not trickle down but was used to buy politicians to get more tax payer money
Raising minimum wage will close down businesses depending on exploitation and help businesses who are ethical enough to give working class their fair share.
We know what uplifting lower class people looks like - the formula that works as seen in Asia, Europe and the US was masses of factories, lots of capital investment and tolerating high pollution. Minimum wages don't seem to be part of the equation. If this was about 'uplifting' people then the law proposed would be positive (ie, what should they be doing instead of working in fast food) instead of a negative one (people who can't justify a $20/hr wage can't be employed in fast food).
where's the raid on drug sellers, distributors or human trafficking. Avg people trying to make living getting arrested right at court's doorstep is not crackdown on crime by illegals.
some guy working 8-12 hours shift, has family and participate in community programs is suddenly getting deported to nowhere is making America safe again ?
This looks more like making lowest white people better than everyone else
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.
> 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%.
>2.3% of hourly workers ages 16 to 24 earn $7.25 an hour or less, 1.2% of hourly workers ages 25 to 34 earn the minimum wage. Less than 1% of hourly workers older than 35 years old earn the minimum wage.
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).
> 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.
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.
This is in stark contrast to the Berkeley Institute for Research on Labor and Employment study that claimed the law had no negative effects on fast-food employment.
The Berkeley study has been cited quite heavily by policy makers.
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
Well unions are not for profit so even if they funded a study they don't have as strong incentives to influence the study's outcome. That's different from when the study is founded by for profit entities. No?
This is based on my very quick reading of the studies so take with grain of salt. The NBER study (OP) studied the entire fast food worker industry using data from BLS, whereas the Berkley study cautions against using BLS because it applies to the entire industry. The $20 minimum wage requirement only applied to fast food workers who work at limited service restaurants with 60 or more chains.
If your concern is only for who the $20 minimum wage was supposed to affect, then there was likely no decrease in jobs based on only that data. However, since causes have effects on more than one intended group, it's very likely that the $20 increase did reduce employment overall and the Berkley study was very careful to downplay that data as not being useful for the purposes of their study, even though they are related. The effects on one part of the industry can affect the rest and to ignore it is a questionable choice.
A hamburger is at McDonalds is $1.89 in my area, a McDouble is $3.29. The double cheeseburger is $3.99. What they call the "daily double" which is a silly name for a hamburger with the works is also $3.99.
I don't think using the basic burgers is a bad choice since specialty burgers probably don't compare well across chains.
They did a study of Seattle’s minimum wage that did not hold up well in subsequent studies, in part because their assumptions about how adverse effects would manifest were poor. They seem to have memory-holed that. Seattle’s minimum wage is higher and more broad based than California.
Regardless, with the passing of time the adverse effects have worsened to the point that even proponents in Seattle acknowledge there are serious issues that have resulted which need to be addressed.
California looks like it is trying to speedrun Seattle’s mistakes.
Is this true? I don't agree with the point of view of Seattle politicians but I've never seen even a hint of them acknowledging problems with their approach to anything. If anything the politics seems to be moving further left, after a very brief shift due to the truly disgusting state of the city during COVID.
The Berkeley report doesn’t count number of jobs. It looks at pay and number of restaurants operating (both went up).
It could be that part time positions decreased but full time positions increased, along with hours per job position / total hours / hourly pay and restaurants operated. That’d be a good thing for everyone involved (except maybe the cardiovascular health of the customers), and is compatible with both studies’ conclusions.
"Relative to employment in the fast food sector elsewhere in the United States" .. could drive a truck through that "elsewhere".
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.
I’ve seen some interesting research suggesting that higher minimum wages lead to lower turnover, which can lead to some very real cost savings. I had an interesting epiphany while watching a business lecture about calculating costs associated with hiring, that there are very real points in the minimum wage curve (which should be laffer shaped) where raising the minimum wage has the potential to both increase labor participation and decrease total labor costs.
I now like to joke that minimum wage laws are subsidies for businesses too dumb to factor in hiring and turnover costs.
Welfare is also kind of a subsidy for low paying employers.
If Walmart doesn’t pay enough for its employees to afford to live, then the government steps in with ebt and housing vouchers, etc. to make up the difference.
That’s money Walmart isn’t paying. In fact, they get to kind of double dip. As those employees will likely shop there. So the ebt gets spent there. The government essentially pays Walmart to feed its employees.
The employees are being double hit. Because their income is still taxed, then they essentially get scrip that they’ll likely have to spend at the place where they work.
It’s why you’ll also never see any real movement on the welfare issue. It’s a way to funnel tax money to the rich via poor people.
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.
I'm unsure you can make any conclusions here. The employment in the fast food industry went down, but we don't even know if it caused more unemployment. Those workers might have all found a better or similar paying job in another sector.
Without that information, there's nothing to learn here, exception those still employed in the fast food sector now make more money.
Yah. I mean, magically they are all CEOs now, kinda crazy, right at the same time minimum wage went up. The lord works in strange ways.
Really no. All you have to look at is the number of total jobs and now unfilled jobs. We don’t need to know about the people and them magically becoming CEOs.
Ontario fast food minimum wage, $17.20. California’s $20. And the cost of living there is higher. Our fast food places, and whatever you call the next tier is doing just fine - the damn things are everywhere. Hard to find something that’s not some kind of chain. Probably a whole lot of takeaway or delivery, but things seem to meet society’s needs without decimating budgets. Maybe it’s a balance of having real workers and moderating profits for the longer term?
The vast majority of fast food workers in Ontario are foreigners working on visas.
And plenty of them are exploited and forced to kickback a part of their wages to the owner. The government does nothing and the owner gets below minimum wage workers.
While pitched as “helping people,” California’s fast-food minimum wage law has a different goal: reshaping the state’s tourism appeal. By making dining out feel more distinctive (and by nudging the market toward small restaurants and local chains) it’s a strategic play to make California a cooler place to visit and eat.
That’s how I’ve interpreted it - because otherwise, it makes little sense why the wage for the same work would vary based on the size of the company.
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.
Isn’t it fascinating if you raise the minimum wage some people say it destroys jobs but when people get fired because of things like robots and AI the same people claim it’s no problem because it those things that killed the jobs create just other jobs.
This is a side question, but, are people in California now not expected to pay the extortionary tips American businesses expect?
Whenever I pointed how backwards were the tipping expectations in the USA for anyone from Europe, the excuse was always that those tips would compensate the low wages paid in the food industry. Well, now that they have a standard minimum wage, are they doing away with the tipping practice?
If a business can't provide a living wage, it shouldn't exist.
It's really that simple.
Imagine doing this analysis on the effects of requiring a business to pay it's slaves, and coming to the conclusion that some slave-based businesses would have to close, since their business model was so skewed, it could only function with slave labor...
Who cares! We don't want a world with companies that can only work with those kinds of business models!
Slave labor shouldn't subsidize artificially low priced products and artificially inflated executive salaries... the end.
Except that the study found California economy grew faster than states with low minimum wages. The law is actually necessary for growth. Conservative economists just lied, nobody thought this was actually going to cause unemployment.
One of the reasons why equality is so freaking important for a market economy is because it lets more people participate in it - equality is prerequisite for a market economy (and a democracy, but that is another discussion)
This is a crazy take. It’s not the company’s responsibility to provide a safety net. It’s the government’s and the government should collect taxes to do so.
We already have a system for this in theory - the Earned Income Tax Credit. The program use to be widely supported by both Democrats and Republican administrations.
What’s a “living wage” anyway? It’s not the same for a single mother of 3 as it was for my then teenage son.
And I find it rich for people on HN to say that companies that can’t afford to pay its workers are commenting on a site run by a VC fund where almost none of its companies could afford to pay anything if they weren’t being propped up by investors and most of the companies will never make a profit
What's funny(in a sad way) is that there are arguments made regarding labor to pick crops saying we need migrants because local labor won't do the work for cheap and regarding manufacturing saying that cheap labor enables us to have a higher standard of living.
Is it really that simple though? Aren’t there cases where if those same people would otherwise be unemployed, society might be better off having the perks of that business’ existance, and subsidizing those workers up to a living wage using tax $?
It's absurd to see so many commenters, who are probably mostly wage earners, mindlessly repeat the right wing propaganda. Civilization needs some minimum decency.
There is no such thing as a living wage in a housing market like this. The recent bill in WA to control rents limited rental increases to the rate of inflation plus 7% (or a flat 10%, whichever is lower). So when inflation is at 3% every year, and rents rise 10% every year, how long before someone who gets a 5% annual raise (40% higher than the rate of inflation) can't afford rent?
As long as the rental market cannot meet rental demand, raising wages just bids up rents. No more people get housed or are able to create savings to weather emergencies. All that money just gets transferred from business owners to landlords, using minimum wage workers as mules to transport the money.
Your bias is demonstrated by the fact that you seem to think this is all about greedy business owners and you put ZERO responsibility on the landowners and politicians who have perpetuated this housing crisis.
Meanwhile, in states without property tax caps, overheated housing markets raise the property taxes of seniors until they can no longer afford their homes, even if they're paid off. My property taxes are still just a fraction of my mortgage but they've more than doubled in the past 8 years and in another 8 years I'll be 64 and likely pay more annually in property taxes than in mortgage payments.
So seniors and digital nomads sell their ridiculously overpriced homes in superheated markets and take those profits to cooler markets, increasing property values and property taxes, which may seem like a benefit until it heats up the local housing market too much.
But we saw Marc Andreessen and his wife demonstrate their nasty NIMBY values trying to stop a measure increasing housing density in Atherton, California a few years back. The same hero of VC who invested 9 figures in Adam Neumann's housing startup doesn't want any of the plebes it would serve within a bike ride of his home.
Interesting perspective. I need a paragraphs worth of text translated once a week by a native speaker. Should my biz not exist or am I allowed to use "slave labor" fiverr?
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.
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.
Could it be that with a higher minimum wage, more people work these jobs full time, thus reducing the number of people employed part time? If the same number of hours are produced with a lower number of workers that should be a plausible explanation, yes?
If there is a correlation, and the correlation is causal, I'm not sure how this matches with every fast-food restaurant near me having "hiring, start immediately, no experience needed" posters outside.
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.
> 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
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 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.
As someone who kinda followed this debate for a while, I will point out that there is actually a large split down the middle of the on whether minimum wage increases decrease employment. And that split isn't actually due to ideological bias (which is the usual accusation), but rather methodology: almost all of the studies which confirm employment reductions use one methodology, and almost all of the studies which do not confirm employment loss use another methodology, and there is a large debate in econometrics as to how reasonable the assumptions are for each of the two methodologies.
One thing that always seems to be at a disconnect between the economic literature and policy makers is the economic context of the raise in wages. Even those economists that have bought in fully that minimum wage increases don't typically decrease employment will have several caveats to that statement, usually worded in the form of "small increases in the minimum wage". That is to say that there are often small inefficiencies in our current markets which allow employers to reduce wages in cartel-like fashion, and small increases in the minimum wage can claw some of that back in favor of the employees at the expense of employers' economic rents, but not at the expense of economic output. But large increases in the minimum wage absolutely can jump the shark, decreasing economic output by effectively making low margin sectors untenable entirely. If that weren't the case, we would be able to raise it infinitely without any negative effects, which is absolutely absurd (and unfortunately that is the takeaway that ideologues often get from reading abstracts).
A more useful economic model would go a step further than just saying "you can raise the minimum wage without harm to the economy", by incorporating econometric analysis which can accurately predict when and how much you can raise it without incurring economic harm.
Really, one can only truly understand the term "labour aristocracy" after reading this comment section. People show 0 solidarity towards people of their own class. The west is doomed.
In my medium size CA town, the Burger King just flat out closed.
Other than long johns silver in the 1990s, I've never seen a major franchise just quit and close.
Why is the entire discussion between: "people should be able to pay rent and buy groceries and maybe save a little money on minimum wage" versus "those greedy poors"? I mean 10% of the US population are millionaires, we're all paying billionaires' taxes so they only have to pay a pittance, and soon we'll have a trillionaire. But no, screw the minimum wage workers, they should work extra jobs ... we'll never tax the rich what they owe, they are worshipped like gods.
Because if the minimum wage is too high, employers can't afford to pay it, so it will just result in reduced employment rather than wages going up, aka economic "deadweight loss".
That much is obvious. What is in question is the effects of more realistic minimum wages like this one. Some claim that _any_ minimum wage will only result in deadweight loss, which is true in simplified models, but the effect in the real world is not so clear, hence the need for this type of research.
Yes, I agree: this research shows that governments do a poor job when they attempt to set minimum wages, and they would do better to focus on accomplishing income redistribution policies through the tax code.
When government tries to set minimum wages, they often result in job losses (or foregone jobs that were never created) which, as you wrote, is known in economic circles as "deadweight loss."
It's not that people shouldn't have a minimum standard of living, it's whether we are going to take easy and ineffective routes to solve the problem that look good on paper and in commercials or whether we can have the adult discussion about the monetary system and how it affects citizens.
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.
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.
> 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.
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
Why did it only affect California and not other states?
Similar patterns in Seattle, many once popular sit down restaurants are now empty and only serve as sources for delivery. Huge buildings with dozens of tables sit empty.
Wow here in Spain it's nothing like that. We still go out for dinner a few times a week (especially around lunch time when most restaurants have a 3-course menu for €12-14)
I once read somewhere that franchise or investor-backed restaurants in the U.S. were often categorized by AOV per diner, with menus tailored to hit these targets: Pre COVID it was $10 (quick service restaurant/QSR aka "fast food"), $20 ("fast casual" like Chipotle), $50, etc.
These numbers are trending up as costs go up, and owners are pretty ruthless about staying on top of labor and materials and discounts (https://fransmart.com/dan-rowes-tips-for-learning-the-recipe...).
Customers are really turning against the ever-increasing price of going out to eat, with the perception that quality isn't improving. Tipping is another issue that really rubs people the wrong way.
It's a joy to visit countries like Spain or Taiwan or Japan where costs to eat out are very reasonable, quality is good, tipping is nonexistent, and you don't feel like you're being hustled out the door to improve some cold turnover metric.
We used to eat out a lot. COVID changed it. What changed? We were forced to really learn how to cook properly, then we saw how much money we were spending eating out, and how much healthier and to-our-taste we could make our own cooking.
When things went back to normal, the prices to eat out had jumped so high, it simply wasn't worth it. $15 of fast food to feed both of us turned into $35-40. A $45 dinner out at a restaurant (taxes and tip included) turned into $60-75 meal. Tip expectations had gone from 15%-18% to 20-25%. Add beer or wine or a cocktail and we're instantly at a $100+ night out.
At home $10 of protein, $5 of vegetables and other ingredients and a good youtube video with a recipe, $15 bottle of wine and we were all set.
One of the biggest shifts in pricing we've seen is Chinese restaurants. Entrees that were <$15 before are now around $20 or a lot more for fish dishes. It's not unusual to have an $80 takeout bill.
Lunch specials fortunately are still under $15 at our favorite places, but only on weekdays.
Oh here prices haven't really gone up that much. A 3 course menu would now cost 12-14€ where it was 10-12. An entree from takeaway would be €5 or so.
The only exception is Uber eats. I notice that most takeaways charge more than on the local takeaway app (Glovo). Probably because most tourists don't know Glovo they are used to spending more.
I'd normally never use Uber (we also have a local alternative for the ride service called Cabify) but I got a free Uber one promo so I tried it out. But with the higher pricing the free delivery is so not worth it.
$14US in Seattle will barely get you a side of fries. A popular place near me (not fancy!) lists their pretzel+dip appetizer for $17US, or €14.50.
With these prices, restaurants and eating out in general has become completely inaccessible to a huge swath of people. And even for those who can afford it, it’s a less frequent treat. It has a noticeable impact on the liveliness of the city and the social vibe, from my experience.
This has been long-term problem for Seattle. I moved here after Portland where the restaurant culture is fantastic. Food is wonderful and inexpensive in Portland so I enjoyed going out. Here in Seattle, it's prohibitive and the quality to cost curve is bad so I make delicious inexpensive food at home.
In Seattle a single restaurant burger will run you €12-14. A restaurant with a proper three course meal is like €80++, assuming zero alcohol.
For the restaurants, their rent is pushing like €250-300/m^2 (or much higher in some locations, much lower if you drive more)
Jeez... If Trump wasn't enough to discourage me from visiting America, the prices sure do! For us that's a LOT of money.
I was in Spain at the start of the year and I was impressed that drinks could be had for a price that only had one digit!
I was also a bit confused about why beer was cheaper than water at some restaurants. That one threw me for a loop.
Yes when going out a beer is usually 3 euro or so. There's a few places where it's 5 euro and people complain about the price :)
However some places like Ibiza are super expensive. 15 euro for a beer or 22 for a mix.
And yes bottled water is often more expensive in the supermarket than wine or beer too. In a restaurant you can often get tap water for free.
Take into account that wages here are much lower than the US though (probably less than half) and lower than nothern europe too.
Seattle seems to have its own particular issues (somewhat shared by SF in my experience): there's no longer any compelling reason to go to downtown. There are plenty of reasons to avoid downtown. Restaurants in Woodinville seem very busy. Similarly restaurants in Sonoma are also very busy. I think the customers went elsewhere.
Online shopping has removed some proportion of the reason people would visit a city downtown. Remote working has removed some proportion of the reason people would be in a city downtown. There has to be some unreproducible draw to get people to go to a city: The Vatican/Mona Lisa; food and culture not available elsewhere, etc. Conversely the city has to be not a s.hole.
Portland, too. The neighborhoods are doing OK, but downtown still feels empty.
It’s interesting to me that it hasn’t depressed commercial real estate prices all that much. Rents are still crazy expensive, with many vacant storefronts and even entire buildings along the light rail lines. The market forces around commercial real estate seem disconnected from reality in a surprising and unintuitive way.
Still, downtowns can be cyclical. NYC in the 70s is a prime example. The days of Taxi Driver are long gone. I guess the question is what stimulus needs to be applied to kickstart the turnaround process.
I’m far from a commercial RE expert, but I know they do tend to have very long leases. That would make it less responsive to sudden changes like 2020 and the subsequent changes
There was never a reason to visit DT Seattle outside of Pike Place Market. The restaurants there if anything have gotten better over the years, I'd say a decade ago most of them closed after lunch because everything catered to office workers.
…the California minimum wage?
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I don't see that it did? The linked article is specific to CA data, it's not a broad survey.
It's in the second sentence
> In unadjusted data from the Quarterly Census of Employment and Wages, we find that employment in California's fast food sector declined by 2.7 percent relative to employment in the fast food sector elsewhere in the United States from September 2023 through September 2024.
Did it? I haven't looked into the data. The trends seem familiar where I live in the UK and the few places I've visited since the COVID incident.
I assume she's referring to the claim in the article.
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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.
I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area. (We actually have a fairly robust program that provides housing for folks in need). We have one fast food restaurant in the area and it's a McDonalds. It was one of the main hangouts for folks in the area. We would have weekly meetups there. After Covid, they closed the seating area and installed the touch screens. They went from employing around 7 to 9 folks down to only 3 and talking with the franchise owner, they're not planning to ever hire back up and re-open seating. He did mention that the gross revenue is way down, but net revenue is about the same and his stress in managing the location is way reduced with the headcount reduction and simplification of the business.
Never having to deal with a member of the public inside your property is a huge liability and hence stress reducer.
But on the other hand... Some people open cafes specifically because they dream of creating a place for the community to hang out. At least that's what they say. I often see McDonald's fill that niche for older folks.
Haha yeah there are people like that in the Netherlands.
And then everyone comes with their laptop to work and it becomes an open office.
That can all be trivially fixed by style of seating and tables, removing all power outlets and so on. People who don't go there to work won't care.
I live in the country with probably the highest sit-down cafe density cities in the world (Korea), and this issue has been figured out ages ago. If you know any such cafe owners who don't understand how to deal with this, I'm happy to have a chat with them. Or they can come over here and I can show them a dozen cafes so they can see it with their own eyes.
You simply set up the cafe to accommodate the exact % of such laptop users as you're comfortable with, which can be 0%, 100%, or anywhere in between. If you do for some reason want to run a cafe where 100% of seating is usable for laptop workers, then the way to keep it all profitable is also straightforward: 1. you make your cheapest coffee (converted to Dutch CoL) 7+ euros a cup (use some single origin stuff that's still cheap when bought from wholesale). 2. As food, only offer small sweet bites and make those similarly overpriced. 3. Make the seating dense so you can fit a lot of these office workers. Bar seating is especially space-efficient for this.
The Netherlands even has an advantage; people can't just leave their setup on the table and leave for hours as it may well get stolen - this is not an issue in Korea so some people actually do this, the worst case scenario for cafe owners.
The $10 comfortable folding chairs that recently became available changed the equation for me. Rather than sitting in a cafe, I much prefer to take my laptop and a chair and go sit in a nice park, on the beach, or even in the woods.
What chair is that?
https://de.aliexpress.com/item/1005005339996025.html
Ah, that is not comfortable for me with a laptop!
Thanks for sharing the link though.
Is that a bad thing?
it is if you want the place to be financially viable.
The common non-tourist behaviour in a café in Vienna is to sit there talking for hours, buying a few cups of coffee total. It has been like that since before laptops were a thing. Yet the cafés remain viable.
Same here in Greece.
I’m going to build a cafe inside a faraday cage someday.
Just to see what happens.
Maybe I’ll not serve alcohol and call it Zero Bars.
Better yet, serve alcohol and call it Bar/No Bars.
For the case of
> Some people open cafes specifically because they dream of creating a place for the community to hang out
Having people sitting alone looking at a laptop for hours while buying the minimum amount of coffee needed to not be just flat out loitering, I think it would be a problem both from a cold business perspective, and even more so from the human perspective.
I think it's pretty common today though. There are a number of cafes with a lot of seating where I see a whole lot of tables with someone seated working on their laptop.
Cafés as a place to be for cheap where the weather can't reach you while you read the newspaper you can't afford or a book or plan a revolution is quite old. Like centuries old, perhaps millenia if you count gossip and include inns.
I suspect the economics have changed in a lot of cities though.
so is not opening a service based business
Sounds like that is the path this business owner took.
One macdonalds deciding they dont want to be a sit-down resturant anymore doesn't prevent anyone else from opening a competing resturant.
Sure but it's also a scaling factor. People are going to choose the tradeoff that's right for them or their insurance costs.
Capitalism working as intended. Wealth extraction without having to give back to the community.
They give back by paying taxes.
Like i think the intended path here is that taxes pay for a library, a park, or a community center. Having random businesses create hang out spots out of the goodness of their heart is not the intended path. They can if it makes sense for their business, but community needs should be primarily funded through taxes not business charity.
Would make sense, your reasoning, if they actually paid taxes. Unfortunately everything is very broken on that front, labor pays much higher taxes than corporations, the richest don't pay taxes at all, and the shortfall is plugged by cutting public services and issuing debt on what remains.
The comment thread is about a McDonalds franchise owner. They are not going to be committing Apple-level tax evasion. They will be paying taxes like everyone else.
Not “like everyone else”. In comparison to an employee, a business owner has a vast array of tools available to them to limit taxes.
Income tax on employees is a tax on the business
That's right, if my income gets taxed more, it's my employer that could default on his mortgage.
You are being sarcastic, but yes that is indeed how it works.
Increased payroll taxes increases expenses for the business and if expenses increase enough business will go under.
Wage taxes suck for the employee, but they are not the only party affected.
> Increased payroll taxes increases expenses for the business
The amount of disconnect from reality is staggering.
Only yesterday some people on here were trying to convince me that taxes were literally like slavery for rich people!
If it’s that bad for wealthy folks, imagine the impact on everyone else.
You can just choose to not buy hamburgers from that McDonald's. No person needs unhealthy food.
I haven't eaten that sort of food for over a decade.
Yeh having to deal with actual customers is such a pain.
This but unironically
The platonic ideal is no customers, no employees, no management, and no government.
Just AIs trading Bitcoin with each other.
The platonic ideal is doing only your preferred form of work, and getting paid universally usable currency.
> I currently live in a petty remote area and we have literarily zero homeless folks in our hamlet area
This is a common observation and should make more people ponder: why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
> why is it that higher local wealth/economic productivity increases homelessness (especially if you control for public services to counteract the effect)?
May I suggest the book Progress and Poverty by Henry George https://www.gutenberg.org/ebooks/55308 that asks almost the same question. The answer is that private land ownership allows landowners to capture economic growth of prosperous places, so wages barely cover rent at the margin. This is particularly relevant to California which passed a disastrous constitutional amendment Proposition 13 (1978) which slashed property taxes from around 2% to 1% and declining, especially for older estates, which is pretty much the opposite of the ideal policy to deal with the problem of rising rents.
I think two factors - high productivity leads to high cost of living, which means people without labor skills have a hard time making enough money for food and shelter.
But ALSO - these areas tend to lean towards higher levels of social services such that they have much higher homeless shelter / services / etc per capita.
So while many people may go homeless in place, certainly there is some homeless migration towards areas that actually provide food/shelter and don't harass/arrest them/chase them away.
Don’t discount the weather. Sure is nicer to be in Hawaii in December in a tent than in Michigan
That explains a lot of west coast & Hawaii but not NYC…
NYC has a right to shelter law.
Precisely which is how the rest of the state leaves NYC to shoulder the responsibility
I'd suggest high local wealth and economic productivity tend to correlate strongly with increased housing costs.
People move there for the jobs, and the ones who do have jobs tend to have relatively well paying ones, so can pay more for housing. But the ones who don't have a well paying job are in trouble...
https://worksinprogress.co/issue/why-housing-shortages-cause...
So these people decide to become homeless instead of moving to a nearby area with a lower cost of living?
Like everyone else, homeless people tend to have ties to specific areas, and by the time you're homeless you tend not to have the capital required to move and restart someplace else.
Basically at what point do you decide you're "failing" (no moral valence intended) in one area in which you have a support network that you're willing to risk moving to a totally new area and starting over? At that point, do you have the resources required to do so successfully?
I live in Boulder and homelessness is a big problem here. Some people tie it to housing costs, which I don't buy. There are nearby towns with housing that is substantially cheaper, within a 30 minute bus ride if you really need to get to Boulder for some reason.
And how good is that support network if it leaves you camping in a tent down by the river? I'm not taking about moving across the state, just down the road a bit.
> There are nearby towns with housing that is substantially cheaper
Someone who doesn't have a job can't afford "substantially cheaper" housing anyway.
>There are nearby towns with housing that is substantially cheaper, within a 30 minute bus ride if you really need to get to Boulder for some reason.
That's great! But if you have no place to store your clean (or dirty) clothes, or to shower, how many landlords are going to rent to you? How many employers are going to offer you a job?
Those are not rhetorical questions.
You're talking about getting out of homelessness, I'm talking about not becoming homeless in the first place. It's not like rent increases happen overnight
You said "I live in Boulder and homelessness is a big problem here...And how good is that support network if it leaves you camping in a tent down by the river?"
Nope. Definitely not talking about homeless poeple. Gotcha.
1. Remote areas often have some kind of very cheap housing available. It may be low quality housing, but at least it's very affordable.
2. Remote areas don't have services that cater to homeless people.
I have an interesting observation about homelessness. I live in a country where the average household makes about US$6000 a year.
The cost of living here is about 1/2 of the USA, with rents about 1/4. The unemployment rate is about 5%.
Homelessness is very, very low (to the point of near invisibility) and mostly limited to illegal immigrants.
The thing that seems to make homelessness a non-issue here is the tolerance of ad-hoc construction. This leads to neighbourhoods where construction is really low cost / quality, but people are housed.
I don’t really understand why these neighbourhoods don’t devolve into hotbeds of violent crime as I would expect them to in the USA, but they mostly don’t.
Mostly, the construction tends to improve over time, and the neighbourhoods often gradually metamorphosize into more contemporary and inviting areas with vibrant small businesses and elegant homes.
I often wonder if it’s cultural, as poverty is not seen as failure but rather a temporary condition to be transcended as possible?
Which country is that?
Dominican Republic
Doesn't Dominican Republic have like a 50% higher homicide rate than the US? Or do you mean it's just not localized in the spots you'd expect it to be?
Normalize it by region, maybe. Mexico has much higher homicide rate, for example.
The DR has a homicide rate similar to the worst 20% of US states, but much lower than the most murdery ones.
Yea that's why I was wondering if GGP was talking about specific areas. There's certainly cities in the US with eyewatering violent crime rates (St Louis, Baltimore, etc). Not sure if OP was specifically talking about a similar localization within the Dominican Republic.
Idk. IMHO the crime exposure here is pretty insignificant if you aren’t going to the tourist hotspots. At the touristy places it’s about like NYC risk wise.
It’s not high for a developing nation. since 2015 the average is about 13/100k. By comparison, Louisiana is 19, New Mexico is 14, Missouri is 13, Maryland is 11, Alaska is 10.
>dominicans
>no homeless
bro if everyone is homeless than nobody is
? Not sure what this is supposed to mean. I’ve lived here for over a decade and have seen very few people that don’t have a home of some kind. Family connections obviously play a large role.
You're swapping cause and effect. Places with lots of economic opportunity and significant public services to assist the homeless are the place where you can have large homeless populations, ie large numbers of people just barely scraping by. Decrease the money flowing in and the population will go down, because they would no longer be able to survive. Those who can will go elsewhere, you can imagine what happens to those who can't leave a place where they can't survive. One must be very careful using "number of people observed with a particular symptom of the problem" as a proxy for how well the problem is being handled.
High-productivity places without lots of public services also have a lot of homeless people though
There's still money in those places to support people even if it's not flowing through public services. Many homeless people work, and it's easier to get work in high productivity areas. Most of those who don't rely on generosity from people who do.
Because the wealth isn’t distributed properly. Fairly obvious I’d say.
Correlation is not causation. One does not increase the other, rather the rise in one is correlated with the other.
I disagree. As the comments point out, there is an extremely clear mechanistic explanation as to how these are causal.
Touch screens have been around for a long time. Just like the situation on the upper end with AI: I don't think it's the technology, people are actually getting worse at socializing (creating stress for the people responsible) and so socialization is becoming more expensive and opportunities for it are becoming more rare.
This could get a lot worse before it gets better.
McDonalds broadly rolled out touchscreen ordering after covid became a thing. That’s why it gets called out in these discussions.
Ironic because it involves hundreds of people touching the same object. Not the best for infection control!
I am under the impression most infections from infectious disease is from airborne particles.
They existed before Covid but many franchisees didn’t want to bother with the expense (or saw relatively bad uptake).
Now they’re ubiquitous but mainly for people who don’t use the app, it seems.
My general observation is that a lot of self-service wasn't super-popular pre-COVID. But, now, it's become more entrenched and a lot of people just grumble and deal with it while a lot of stores made the investment and accept the (probably overall) reduced cost even if customers don't love it. My local DIY home store doesn't even really have regularly-staffed full checkout lanes any longer.
How do you know there are "literally zero homeless folks" in your area?
Often advocacy groups or municipalities will perform counts on specific days each year.
So while one does not need to say "literally" in that sentence (it wasn't figurative, after all), it is possible to say "zero homeless folks" as there may be data backing the statement up.
Yes- I live in a pretty affluent Los Angeles suburb and we recently just hit "functional zero" street homelessness.
"To achieve Functional Zero, the number of individuals placed in interim or permanent housing must be greater than the number of individuals who become homeless over a six-month period, and the homeless population, as a whole, must have a median duration on the streets of less than 90 days."
The data is gathered by the city as well as local nonprofits.
(Deleted because misplaced)
People like to think that employment is pretty much the only good that does not result in a mismatch of supply and demand from a price floor.
Take for instance a proposal that says "no one is allowed to sell their used car for less than $10k". Maybe the justification is poor people are desperate and sell their car too cheap and all these dealerships and buyers are a monopsony underbidding the real value of the car, profiting off these uninformed, unorganized individual sellers.
Does anyone think this is a good idea? Would anyone bother reading studies contemplating the effect this may have?
No, of course not. Everyone knows that this would essentially mean many cars that would have sold under $10k would just not get sold. Sure some people would benefit, maybe getting a higher price for their car. Some things would shift, maybe people would opt for scooters or e-bikes or something.
But I wouldn't want this price floor if I was on either side, trying to offload a bad car or buying one.
The cost of employment is not comparable to the cost of a particular good. Employment has much more complicated implications on the economy and on society. A minimum wage is set in part to prevent a desperate race to the bottom, and to (try to) ensure something approaching a living wage. It’s a blunt and often ineffective tool, but viable alternatives are scant. The free market won’t solve this one any more than it solves the problem of healthcare.
Interestingly, minimum wage seems to be more likely in places with weak unions.
In places with strong unions, there is often a de facto, negotiated minimum at least on a sector by sector basis instead.
E.g. Norway has a roughly 50% unionisation rate, and no minimum wage in most situations, but most sectors are covered by negotiated agreements between the unions and employer organisations.
Real question: If government-mandated wages are good policy, why not set the minimum wage to $100/hr?
(Btw, the American healthcare system is about as far away from a free market as it gets. Don’t think that example supports your point.)
Humans have certain fundamental maintenance costs. $100/hr vastly exceeds maintenance. However, if you pay below those maintenance costs, then society effectively picks up the tab via other social costs and programs. For instance, if employers don't provide healthcare, then we either pay more for emergency medical treatments and other publicly-subsidized healthcare programs, or we accept being a country with a bunch of people dropping dead at age 40 of entirely preventable problems.
This is very different from most other goods, because no one really cares if you break your chair, the chair's parents didn't spend 18 years of their life on it, etc.. If you break a chair, you bear the full costs of replacing it.
Also, the full cost of replacing a human is vastly higher than the maintenance wage.
It would be more efficient to pay someone market rate, have needed work get done, and subsidize their existence than to try and offload that cost onto employers.
Exactly. Minimum wages are an attempt to solve economic redistribution policies by obfuscating the cost to employers rather through the tax code, which is the cleanest way to achieve the goals of broad based prosperity.
It also has consequences like increasing the attractiveness of substituting capital (i.e., automation) for labor or simply leaving some work undone (e.g., many smaller restaurants in CA are going out of business due to multiple government policies, including very high minimum wages).
That effectively becomes a subsidy to those employers though, plus an incentive to drive wages down even more.
Why would it drive wages down? The less desperately that workers need a job (due to universal basic income), the more they can demand, assuming they also have skills that fill the employer's need.
The trick for this to work is that the UBI has to really cover a lot of basic needs.
Overall, this works better for lower skilled workers than it does for higher skilled and higher paid workers. But it could also make sense for people staying home to raise their children, a job which is not compensated today.
The alternative is that certain types of work simply do not get done, as shown by the article. That means if you care about providing for these people you'll now be responsible for shouldering 100% of their cost as they sit around unemployed.
Is it? Minimum wage is a pretty simple law, compared to the paperwork and bureaucracy of existing welfare programs. I suppose you could go with Universal Basic Income, but I'm not convinced society is actually ready for that one yet.
How would such a program even work? If we say the Maintenance Wage is $15, is the government just paying the difference between that and the market rate? If so, it seems the ideal salaries to offer are $0 (let the government subsidize it) and $16+ (but you could just get two $0 workers, so I'd expect pay scales to really start at more like $30?)
This seems like it rapidly descends into Bureaucracy or Communism
Just because a law is simple does not mean it's efficient. We are talking about the total value being produced. But if you want simple, something like a negative income tax would be simple and decently efficient.
This already exists: Earned Income Tax Credit: https://en.wikipedia.org/wiki/Earned_income_tax_credit
I wonder how the “replacement cost” of a human should be calculated in light of the low birth rates in so many countries.
> Also, the full cost of replacing a human is vastly higher than the maintenance wage.
>However, if you pay below those maintenance costs, then society effectively picks up the tab via other social costs and programs.
No, that doesn't hold because humans need these "maintenance costs" regardless of whether they're working or not. Therefore it's fallacious to claim that such "maintenance costs" stem from the job itself. It's a sunk cost arising from the person existing in the first place.
Exactly why healthcare should be just one more part of the standard social contract. We the people should collectively pay (single payer) for everyone to have the required basic healthcare in bulk, without the stress of billing, collections, etc.
Same idea as police, fire, basic education. We want a properly educated, health, safe workforce. That's the basis of a healthy, productive, strong society.
> Real question: If government-mandated wages are good policy, why not set the minimum wage to $100/hr?
Because min wage policies have a cost and a benefit. The benefit only happens at relatively low numbers (enough for basic necessities). After that point you dont get more benefits but the costs still increase.
Please define basic necessities.
Is a three-bedroom house in [pick nicest neighborhood in any metro area] a necessity?
How about a one-bedroom apartment in the same neighborhood?
An in-law unit (e.g., "granny flat") on a farm just outside town?
A room in a six-bedroom co-op house where meals are collectively prepared and shared?
Same could be asked about food, clothes, etc. I can buy used clothes for $5 or new ones for $100.
"Basic necessities" is woolly term that in practice is full of paternalistic value judgements. Every individual has a variety of resources to draw upon that would make them willing/unwilling to work a job at a given wage.
A government-mandated minimum wage means some people who could find employment will not because their output do not exceed the wages the government has declared must be paid. In practice, it also means many people starting out in life or who are less skilled never get the chance to be hired and learn new skills that increase their pay.
Minimum wages remove the lowest rungs on the job ladder that often teach skills required to be successful higher up.
How is that a real question? If it is reasonable to make a policy with number X, how come it is not reasonable to make a policy 5X or 0?
Because you intentionally picked large unreasonable number and now want to argue it implies much smaller number is reasonable.
If maximum speed of 50km/h is reasonable in cities, why not making it 5km/h?
It is still useful to ask the question just so we know the answer. I admit the person asking in this case probably didn't mean it this way... :)
On speed limits, when it comes to road deaths, you get people saying "one death is too many" and so on when one of their loved ones die, even when speed limits are set to 20 mph.
These people are wrong. Asking why a 1 mph limit is bad can help reveal that we do put a cost measured in lives on convenience, and we do face the risk of death when driving a car, and everyone has a number they think is reasonable.
Asking why $100/hr is too high can at least help us decide on a quantitative way to decide on a number rather than just guessing.
In the early days, the speed limit was indeed walking pace - often with a person needing to walk in front waving a flag!
https://en.wikipedia.org/wiki/Locomotive_Acts#Locomotives_Ac...
Another reply already addresses your question about speed limits, which is another great example through which to examine these questions.
"Reasonable" is a completely subjective standard and not a good way to run a complex economy with an infinite combination of job seekers and providers.
Who gets to decide what is reasonable has big real world implications for millions of people. Get it wrong, and as we see in California here, people lose their jobs and businesses close all because some politician or bureaucrat (or misinformed voter) thinks they know better than workers and employers what the correct price for labor should be.
Your question can be applied to literally any market intervention with a grey area. If housing code is good policy why not make all houses 10 times as strong?
If your question is why is minimum wage a good policy, you could start here for a summary of the arguments and evidence: https://en.wikipedia.org/wiki/Minimum_wage
It's the same question, really. If we make housing too expensive to build through stricter codes, then housing won't get built and at some point (e.g., last decade in California discussed in the parent article), the homeless population increases and people/businesses decide to relocate because the math doesn't work.
I don't think a full look at the history of minimum wages will be kind to their supporters. Minimum wages were created by labor unions for the sole purpose of excluding other workers who are more productive or less expensive than their members[0].
Going back further, labor unions were created during the railroad boom by racist white workers to exclude Chinese laborers who were 2x more productive for the same price. Instead of responding to competition by getting better, American railroad workers formed labor unions and lobbied politicians for relief, culminating in the Chinese Exclusion Act [1] that forcibly expelled 400,000 Chinese immigrants and led to some horrific violence and racism towards Asian people in this country.
In all cases, the role of government should not be to mandate wages or prices or anything else that markets are better suited to establish, or there will necessarily be higher unemployment. Governments can help by establishing some health and safety standards and policing abuses, but when it comes to accomplishing the social goals that minimum wages intend to, that's better done through tax policy and income redistribution (e.g., guaranteed minimum income, earned income tax credit, welfare benefits).
[0] https://en.wikipedia.org/wiki/Workingmen%27s_Party_of_Califo... [1] https://en.wikipedia.org/wiki/Chinese_Exclusion_Act
You still didn't address the idea that there is a threshold for all intervention. You said "why not make $100hr minimum?" and the answer is "that's too high".
It sounds like, were you to acknowledge that thresholds exist somewhere for most things you think the threshold for minimum wage is 0 and that UBI and guaranteed services is a better mechanism.
Which is respectable, at least in that you recognize a government role in ensuring humane living conditions for its citizens. Most people who argue against a minimum wage seem to think any government action of any kind to protect or provide for citizens is "theft by taxation".
Ah sorry I was taking you seriously when you said "real question", I didn't realize it was a rhetorical device. The history of the minimum wage is pretty irrelevant compared to the economic models and empirical studies in that article, I'm not going to engage in such a pointless distraction. If the Nazis invented building codes I would still support them based purely on whether they are a good idea or not.
But you seem to be missing my point on housing code: do you support a nonzero housing code? Some is good, too much is bad. Same for minimum wage, many models and analyses show that some minimum wage improves productivity and counterintuitively increases employment in monopsonistic industries up to the point when they (partially) undo the damage the monopsony caused, at which point obviously a further increase in minimum wage causes damage as you say. My point is that your "real question" (which was an argumentative point in disguise) works rhetorically against nearly every intervention, some of which you certainly support (I tried to pick an obviously good intervention and came up with building code), and thus is a weak argument. If you truly support no market interventions I at least respect the internal consistency of your worldview but think you must underestimate how much food poisoning, fire death, servitude, etc it would cause.
I think the solution here is to have you work at a fast food restaurant with a salary just low enough not to be able to eat at the end of the day. There really is no substitute for experiencing first hand what it is like to stack 500 burgers on an empty stomach then telling your kid there wont be any dinner today. Imagine some land whale exploding over her 7th burger not approaching perfection closely enough and that it seems you are not taking the issue seriously enough.
You were doing fine until you jumped to an aspersion.
The audacity that a starving person would insult somebody for their obesity! How dare they?
In contrast, if one earns enough to live a normal life they instantly change into one of the best regular customers. One can make a career out of flipping burgers and have a long term [professional] relationship with them. If they are indeed overweight give them a salad on the house and have them explore the many delicious healthy things on the menu. Delicious because one gets room to think about improvements when not drowning in bills. An eating disorder usually comes with above average knowledge of the culinary realm. Should make an interesting conversation.
Where do we see a desperate race to the bottom? People leave if there's too much competition / low wages in an area. At least in America where the people are nomadic.
People forced to move because of low wages is a societal negative. High population churn disrupts communities, worsens local governance, and causes atomization.
Suppose a town forms around a coal or gold mine. Then the mines dry up, or demand for what they're mining dries up. There are no jobs and no reason for people to live there any more.
If this community ceases to exist, is it a societal negative? And further, will a high minimum wage speed up or slow down the decline of this community?
Viable alternatives are many when you look at minimum wage closely and see that it is, in essence, welfare funded by a regressive (even more so than usual) sales tax: businesses will pass most of it to their customers, and the fraction it in good or service sold is broadly inversely proportional to the price of that service. That is, people who buy the cheapest stuff - i.e. the poor - are those who are disproportionally taxed, as percentage of their overall spending. So it's taxing the poor to feed the poorest.
The obvious alternative is to tax the rich to feed the poorest. We can start with capital gains.
Most arguments for minimum wage solutions are better served by UBI-style solutions tied to having a job somewhere. People show up to work to benefit society in some way deemed valuable by someone who put a much larger investment in play (maybe tie to some really small minimum wage like $2/hour just to make sure the business owner really does deem the labor beneficial), but the vast majority of the worker's income comes from wealth transfers from the wealthy (via UBI) instead of from the working classes (who are the vast majority of clientele at places like McDonald's).
Prevent a desperate race to the bottom? Ensure something approaching a minimum wage? Nobody cares, so long as they're getting a UBI check from the government.
I don't disagree with you and think that UBI and universal health care are better alternatives. However, there is a much easier path forward to getting higher minimum wages and we shouldn't stop making incremental changes just because there is a potentially better solution that we will probably never implement.
> viable alternatives are scant.
Not really? Other countries do industry-wide union agreements that apply to the whole sector, seems to work well enough for them.
The price mechanisms of supply and demand are very well understood since the 1800s, and apply to anything that's bought and sold, including labor. 150 years of solid science.
When facts conflict with beliefs we hold dear and perhaps define our identities, our brains are very skilled at finding ways to keep believing what we want to believe.
Especially when the facts define your in-group. Changing such beliefs, makes you one of the people you and your friends hate. The mind will convince itself of pretty much anything to avoid such social suicide.
This comment is weirdly heavy on lecture and light on substance. I'm going to ignore the second two paragraphs and just stick to the first. The person you're replying to says that labor is different because it has more complex costs to society aka an externality. Your rebuttal, as far as I can tell, is "nuh uh". I can think of a very simple externality - low paid workers are supported by the rest of us via social programs. Goods that require similar support from the rest of us (cigarettes for example) should also be regulated because it breaks the economic magic that makes efficient decisions and allocations. We have known about these basic (literally econ 101) flaws for almost as long as we've studied markets.
I am open to being convinced by either you or OP but your argument is failing to do so.
My claim is just that wages are prices which arise from the same supply vs demand dynamic as any other price. This important truth is sadly very controversial, which I think is really damaging to society.
Of course, I can't prove that from scratch in a HN comment. What I can do is point out that in the science studying this, it is an uncontroversial fact.
I didn't substantiate that, which made it less convincing, but here is an Economics textbook saying the same thing: https://pressbooks.oer.hawaii.edu/principlesofmicroeconomics...
I know, you can think of an externality. Trust me, Economists can also think of externalities, far more than you or me. In general, they just add interesting nuance to the supply/demand model. They don't completely invalidate it.
But I can't easily demonstrate that, so I suspect I have not changed your mind.
I'm not the poster you replied to but I appreciate your clarification. However, I still don't understand your argument. I don't think anyone has argued that supply and demand don't apply to the labour market. However, it seems that you do agree that there are externalities if workers are paid extremely low wages. Is your argument that the government shouldn't put in laws to mitigate or prevent those externalities? Are you saying that minimum wage laws don't actually address the externalities and should be removed? Are you trying to promote other solutions to solving those externalities? If so, what are they? Is there some other point you're trying to make that I'm completely missing?
Many people argue that supply and demand don't apply to the labour market!
Often because they're not even aware of the concept. The more sophisticated claim that it doesn't apply to the labor market.
The minimum wage discussions are dominated by this view.
The supply/demand analysis is simple: If a worker has skills worth $12/hour on the labor market, and the minimum wage is $15, that worker will be unemployed, making 0$/hour. They'll also not learn new skills, since they can't get a job.
Try bringing that up in a minimum wage discussion, and you'll be called many nasty names. Often equalling market wage to human worth, which means you think the poor are lesser humans. A few sophisticates will bring up vague externalities arguments, as if they negate the whole supply/demand concept.
From my perspective minimum wage laws is one of the main factors keeping people in poverty, but that concept is impossible to even explain to most people.
My main thought about externalities is that they their effect is usually minor, and can be ignored. Many of them are also positive. For the bigger ones, it's a case by case analysis.
Is the externality you're thinking of something around the government paying money to the working poor?
That's a strawman. I don't doubt that you've read these things that bother you so much that you bring it up in unrelated discussion, but to the extent serious people critique supply and demand, they don't say it doesn't apply at all (literally all things have supply/demand curves) but that the market distortions in our concentrated economy lead to suboptimal outcomes for society and that the simpler market model (in econ 101 you learn this model is optimal under many assumptions including "perfect competition" that is rarely true of the real world) is an incomplete model of reality which leads to the wrong answer. If you're going to argue against anything please argue against a serious point like one found in an introduction to the topic such as https://en.wikipedia.org/wiki/Minimum_wage and characterize it fairly. If you don't understand this graph then you aren't ready to debate the topic https://en.wikipedia.org/wiki/Minimum_wage#/media/File:Monop...
To demonstrate that this is a strawman, I will parrot back what that basic wikipedia article provides as a critique of your point: often in the real world that $12/hr number you provide is depressed by a one-sided monopsony (few large employers vs many small employees, a fact known as market concentration that has grown stronger over decades) and minimum wage can provide effectively a mega union against it to put it simply. When a market is dominated by a single entity what is something "worth"? You may say whatever the market will bear but in noncompetitive markets that is absolutely not the most efficient allocation of resources for the broader system. If insulin were a complete monopoly would it be worth $1M/vial because a billionaire would happily pay that much to save their life? I use the extreme to demonstrate the concept of market failure to you. By pointing out monopolistic forces am I saying "supply and demand don't apply"? Maybe in a way, but putting it that way is reductive and unproductive for our collaborative search for the truth in this discussion.
Or, for a totally separate but less abstract argument, say someone has no skills except for an ability to dig a ditch at $5/hr - it is low value because you could pay someone $50/hr to rent and operate a trencher and be 100x more productive at less total cost and a better overall outcome to society (I think these numbers are probably roughly reflective of reality), but this low skill person is unable to run that trencher. Is it better for society to "learn new skills" as you say by digging ditches for years? They probably would get a bit stronger but obviously never get close to the trencher's productivity or bang per buck. This is an exaggerated toy model but it demonstrates the point that many sub-minimum wage gigs teach negligible skills compared to formal education. I point this out just to object to your example - many people turn to education if possible when they fail to find employment, so to say sub-minimum wage employment will teach them skills whereas unemployment will be worthless just doesn't map on to most people's experience in the real world and to be frank sounds out of touch.
History has already shown that the free market will reduce wages to the point of slavery and destitution. Minimum wage laws are very important to counter the psychopathic greed of many company management.
Labor isn't just another good, it is actual human beings whose wages greatly affect their quality of life.
Your rant about in-groups is odd.
The predictable end game of unregulated free markets is the opposite of freedom for 99.99% of the population.
There's a curious authoritarian tinge to these "free market" argument. "Free markets are powerful, therefore if I support free markets I am a powerful insider."
It usually takes an encounter with a major economic reverse - like being bankrupted by healthcare - for proponents to realise that the free market doesn't care about them either, no matter what they believe.
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Minimum wages are an economically imperfect (as you've pointed out) but politically possible way to put some downward pressure on much, much bigger failures of our species and society to have attitudes and policies around acceptable minimums for basic human needs that are even logically self consistent, to say nothing of enlightened.
We can't quite get it together on saying "food, shelter, healthcare are human rights" or it's sinister sibling "we'll let you die in the cold if there's no profit to be had from you".
Those are both consistent, actionable policies, but no one wants a consistent policy on this because everyone gerrymanders it dofferently.
So we get clunky hacks like minimum wage that are sort of the average of Aspirational Star Trek and Aspirational Blade Runner.
Hate to boil this down to the basics, but I think it’s pertinent here. You’re comparing human beings working to survive to used vehicles. Even removing the complete lack of reckoning with basic humanity, the basis of your analogy is a ridiculous starting point to argue from. The value of an asset is not in any way analogous to the value of labor.
> You’re comparing human beings working to survive to used vehicles.
You could flip this and say "you're comparing people who are selling off an essential possession just to survive to a bit of company work."
The way people frame things in completely different ways to justify their preexisting beliefs is part of the reason why it's difficult to get people to consider other possibilities. The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash. A person might just be getting rid of their used vehicle, or they might be giving up an essential possession because they're in dire straights.
> The person could be doing their job to survive, or they could be working a few hours on a fun job on the weekend for a bit of extra cash.
Your statement makes it seem as if these populations are of equal size, but in reality the vast majority works to survive.
An item should not have a minimum price as it is just an item, meanwhile every person is, well, a person, and should be able to sustain themselves.
People sell something to survive (their labor, their goods, etc.). It doesn't mean that every single transaction they make is for the sake of survival, or that external actors are a better judge of what their prices must be.
In college I would often make some extra spending money by partaking in social science experiments. I didn't really care if the compensation was below minimum wage - I had time, it was easy enough, and it was easy to opt in when I could. I wasn't doing it for survival, but for a bit of extra spending cash. If someone forced them to significantly increase wages, I might have benefited, but it's far more likely that they would done fewer experiments with a more select group and I would have been worse off.
If someone is on the edge, and it's only a minimum wage job that they have open for them, California's minimum wage could help them if they're one of the lucky ones who benefit from it, or could hurt them if they were one of the people hurt by the loss of 18,000 jobs it caused (per the linked report). A policy that leads to fewer jobs that pay more tends to just increase inequality.
Injecting appeal to emotion is almost universally a sign of a weak argument, especially when it comes to thinly veiled labor theory of value angles.
It's a typical thinking of someone who read "Econ 101 for kiddies and libertarians" and never got the rest of education that explains all the ways those pronciples aren't as simple as descibed. And how people aren't interchangeable with cars.
Except that every company's wages is another company's revenue. Healthy consumer economies depend on consumers actually having disposable income, but this is becoming increasingly less and less true in the US.
It's an interesting point, but it's the closest thing to guaranteeing a minimum return on a person's work and preventing downright slavery that we have.
Well, employment and taxes are special because they can increase the propensity of people to spend. So, yes, they don't obey whatever idea of "supply and demand balance" uninformed people get from the news.
We absolutely do have laws that are the equivalent of “no one is allowed to sell their used car for less than X".
These laws take the form of transfer and registration fees for vehicles, taxes, and especially inspection requirements. We also have much stricter requirements on what a large commercial enterprise can sell versus a private individual.
We have rules like that for everything. We also say you can’t sell houses for less than X by mandating things like how many stairwells they have, and so on.
To the extent you’re tempted to argue some semantics about how you could still sell a car for a dollar you’re wrong and missing the point on purpose by arguing over the definitions in a way that doesn’t change the principle.
We do this because we are a society and we get to decide what the society looks like. Prices are downstream of our value system.
That's a terrible comparison. As a society we want cars to be cheap. A race to the bottom for cars is a good thing. The cheaper the better.
We do not want a race to the bottom for wages. If full time employment is not enough for basic necessities, that is the sort of thing that leads to riots. Society in general does not want that. Society prefers stability.
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.
There used to be many grocery and liquor stores that you handed in a list of what you wanted at the counter and the staff collected it for you from behind the counter. With the way stores are locking up items it seems like we're steadily returning to that era.
We literally have that now - what do you think Walmart Pickup or other similar things are?
We’re a few years from the Walmarts in the really bad parts of town turning to pickup and delivery only.
All grocery stores were once like that, before Piggly Wiggly invented the "self service" model of grocery store in 1916. It could turn out that the self service model is ultimately a historical oddity of the 20th century.
It's funny how old things become new. From the late 19th century (and in declining amounts all the way up until the 1980s), people in the US routinely would order things from the Sears Roebuck catalog and have them delivered. Local merchants used to complain about how this was taking their business. Of course ironically, Sears got out of catalog sales in the 1990s, shortly before e-commerce took off.
Frankly an app driven pick-up only grocery store would probably be pretty popular nowadays.
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
The government does have an effect, though. If a company is avoiding automation because automating things is expensive, a big jump in labor costs may speed the process along. If you push a bunch of companies to automate, automation becomes cheaper for everyone.
It will force all businesses to either become more effective or close down. Depending on how you look at it, it's a good or a bad thing.
From what I can see, it's pretty much a bad thing all around. The business would have had more money if it had hired someone, and there would have been a job available to someone who needs it.
The other thing that will probably happen is a reduction in service. Cashiers get replaced by ordering kiosks, for instance.
There are times and places when service is greatly reduced because the work force is tied up in more profitable employment. Such as working in factories instead of doing butler type jobs.
One way of forcing this is making the minimum wage high enough that any venture has to make sure their workers have a high output. And some types of businesses become inviable as a consequence. Investment which would have gone to such ventures will instead go to other ventures, and workers become available for better jobs.
There's also significant down sides to this.
In quite a few industries, companies are very reluctant to risk $$$$$ on developing new automation (which might not even work, and even if it does work might not be cheaper)
Why spend $$$$$$ developing a drone delivery system that might face insurmountable technical hurdles like range, capacity and safety if you can just pay undocumented migrants on bicycles $2 per delivery?
I fail to see the causality how this is caused by minimum wages.
Its not at all imo. Franchised businesses are not in the habit of employing low skill workers as a public service. This data is interacting with both covid effects and infrastructure upgrade/rollover - in other words, it takes a while for companies to adopt affordable touch screen ordering systems and its been phased in at a ton of non-fast food (at least in my area) over the same period of time. Local health grocery store has touch screen ordering at their deli, as well as simultaneously going cashless. Most coffee shops too. Look at most international airports - almost all the kiosks have one or no attendants now.
The causality is raising the minimum wage pushed business to do this sooner rather than later. this is why, as per the study, California lost more jobs than states that didn’t raise the minimum wage
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> 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 personally know a couple of Uber Eats restaurants whose only physical presence is literally a garage in a residential neighborhood, and they only take orders from the app. I also know of a Uber Eats competitor whose business model includes rider hubs that stock on a limited set of high volume products for quick delivery.
I wouldn't call them net loss of jobs per se. I see those as entirely different businesses with completely new business models. It's more a kin to ordering groceries online than to going on a night out.
I just can't understand McDonald's long term strategy. I can either go to them or to a locally owned burger place near me, and spend about the same. Waiting times are the same, and every other metric is worse at McDonald's. I went to McDonald's last week because I haven't been there for over a year and well, I won't be going for the next few years again. If they can't compete on price, speed or taste, they only compete on location and/or their current customer base. I just don't see how that is a viable long-term strategy.
McDonald's main value for me is consistency: it might not necessarily taste great, but it tastes roughly the same everywhere. There are better restaurants, but there is a greater probability of finding a McDonald's because it has more locations. McDonald's might not be the best choice, but it's usually a great fallback option if you are unfamiliar with the area.
I haven't been to a McDonald's in over a year, but back then at least app had insane deals that blew away anything else.
I guess I'm a minority but when I generally dislike McDonald's but one of the reasons I continue to go there is because they often employee so many people from different demographics. It's been a redeeming quality trait of theirs. They give young people a start with work experience , 20-40s some managerial experience and sometimes elderly people a job too.
Once I'm just ordering a shitty burger from a machine, I have probably lost any reason to give them my money at all, there is just way better alternatives.
A net loss in fast food jobs doesn’t mean net loss over all.
More money in low wage jobs is mostly spend and not saved and can lead to more jobs in other sectors.
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).
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.
Where do people eat then? Coming from someone completely foreign to such a culture.
There’s almost always still a parking lot because of zoning laws, so you can eat in your car while parked.
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
I was thinking of this exact clip! I love this movie.
Video is unavailable to U.K. viewers.
I have always preferred to sit in my car to eat at a park or some relatively peaceful place in the shade without too much activity. Sitting in a big dirty room with a bunch of people watching me eat has never been comfortable.
I agree. I can listen to a podcast in my car, there's no chance someone will cough or sneeze near me, etc.
My first time being into a McDonalds since I was a kid was earlier this summer when I gave my 3 year old the option of going in or staying in the car. I was pretty shocked at how barebones it was now. There weren't even napkins available and none with our food...which, when you have a kid with, is an issue.
This varies widely - my cutoff is whether they still have a soda refill machine on my side of the counter.
At home in front of the television while scrolling their phone
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.
> “meeting other people in person” as a tiresome chore.
Someone linked the short story The Machine Stops by E. M. Forster the other day where this is an element. A character makes a big deal of having to meet her son in person, opposed of through the machine.
Written in the 20s, gets a lot of things uncannily correct for a society 100 years later. Video calling, silence/do not disturb mode, notifications, air conditioning, people no longer wanting to look at real things with their eyes, etc.
https://youtu.be/dhQW0ufJRBQ
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.
>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.
Because DoorDash/GrubHub/UberEats/etc. charge the restaurants more than their gross margins. In such an anvironment, unless a restaurant raises prices 25-30%, they're eventually going out of business.
I'd say that these companies are most certainly not providing 25-30% value add. Rather, it's just leeching off restaurants and their customers.
It's disgusting and has killed many, many restaurants where I live (NYC), even though we already had a culture of delivery before these parasites came along.
And more's the pity.
I was amazed at how good and cheap the food was in Mountain View and Sunnyvale. That is a bummer.
Super off topic, but I'm going to borrow "kabob"! Sounds even better than 'kebab'.
You're implying that food delivery is antithetical to seeing your friends in person. We have people over and then order food all the time.
It is not completely antithetical, but I would bet on a fairly significant correlation between those two.
This reminds me of the Sonic fast food chain. The first (and so far only) time I've visited Sonic was some years ago, I was staying at a motel across the street, walked over there to order, and was surprised there was no place to sit or even a normal counter to order at. The ads they run on TV give no indication that Sonic is strictly a drive-thru operation.
" ongoing issues with the local homeless population"
This is the REAL issue.
We need to detach from the "jobs at any cost" mentality behind your first sentence.
By that logic ending child labor is "still a net loss of jobs."
I mean, here you are talking about a business owner having issues with the local homeless population who are homeless because their jobs don't pay enough to afford housing.
All these business owners race to the bottom paying their employees scraps and then wonder why they have empty dining rooms with no customers to afford their products sold at record-high profit margins.
Obviously, minimum wage doesn't really fix the economy on its own, but it is a very important tool in a toolbox for ensuring that capitalism is restrained from following its worst instincts.
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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?
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.
Is your usual breakfast spot a location with more than 60 locations? The minimum wage increase here only applied to chains with more than 60 locations. A lot of what you're describing is nation-wide. Food is more expensive everywhere. Cost of living in California is up significantly. Rents for restaurants is significantly higher as well (at least anecdotally, my wife's family restaurant has to close because they doubled the rent after their lease was up, I have heard this is incredible common).
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.
A better example would be Los Angeles and the new $30 per hour minimum wage for hotel and airport workers. Conceptually it makes sense. The crux of the issue and some opposition is there are more people now who use those jobs for primary income for a family, where in the past it may have been perceived as jobs for supplemental income and no health benefits.
I'm glad those people are able to now support a family. At least we have that, if nothing else.
Min wage forced on some places forces other companies to compete for workers, so your argument is missing important facts.
You are correct that I was unable to summarize an incredibly complex tangled web of economics, sociology and politics in a few hundred words on a forum. I don't think any of us can do this. Of course it's an oversimplification. Is the comment I'm replying to also not doing this? Are you also not doing the same thing?
My only point is that this seems like an awful lot of confirmation bias. Something everyone suffers from.
The property tax laws need to force people to maybe not sit in large empty houses.
Why, if you have the money, should you be forced to have roommates or tenants? What sort of freedom is that?
If you have the money the taxes should be no problem, surely?
Taxes are only ever a problem if you have money … or something equivalent.
True, but if the other half of the country can't affor any house, then surely we should find some solution.
If you have the money, paying proportionate land value tax to pay for society's upkeep and protection of your land is not a problem.
If you don't have the money, then you are free to live on a smaller surface area.
My property tax has gone up over 6x in 7 years.
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."
The price is the price. Maybe you shouldn’t have eaten avocado toast so much and saved more for retirement?
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.
Old people should not be prioritized over the young.
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.
Letting some old person stay in their lifelong home is not the old eating the young. Kicking that old person out of their home literally is the young killing off the old.
Is kicking out an old person not being able to meet rent different? Or not being able to pay property taxes at the current arbitrary levels?
Old people don’t need to monopolize real estate the way they have over the past 40ish years.
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.
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This comes across as if you want people to work for your convenience but without paying for it. You are not obligated to the output of other peoples' work. The subway isn't open that early? It wasn't cost effective to pay the people according to that store based on the amount of business they got.
You are utterly dependent on complex supply chains and would find it extremely difficult to continue to survive if something ever happened to most or all of those chains.
It is rich of you to support a law that interfered with one kind of supply chain and then to lecture someone who gave a detailed description of harms that probably are effects of the interference.
Although it is true that a person is "not obligated [you meant entitled] to the output of other peoples' work," that does not mean that enough interference by ham-handed governmental policies won't make everyone significantly worse off -- because we all make extensive use of complex chains of economic transfer.
It's been a long time since I worked in the SoCal fast food scene, but it's been decades since it was true that a majority of the workers were students.
> I've noticed reduced hours, reduced staff, and increased prices.
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.
> I've noticed reduced hours, reduced staff, and increased prices
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.
> Southern states generally have no set minimum wage, so they mostly default to the $7.25/hr set in 2009.
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.
That's great, I live in a HCOL area in a Southern state and McDonald's here also pays higher than federal minimum.
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.)
> since the new minimum wage law went into effect, I've noticed reduced hours, reduced staff, and increased prices.
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…).
Most of those in favor of the government interference cite the points that you made. They don't really ring true though. Inflation has slowed, but the changes in the restaurants were sudden, and coincided with the new wage law.
> Most of those in favor of the government interference
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.
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.
Labor is typically ~33% of a restaurants costs.
I’d point to savings-driven relocation as well. It’s why some suburban towns have seen an increase in number of restaurants even as options in cities decline.
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).
Was your normal breakfast spot subject to AB 1228 regulations?
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Ofcause it is unpopular.
In the context you are literally complaining that you can not get your favorite breakfast because some people need to get less slave like wages.
That should be wildly unpopular to utter.
And yes, you have a side comment about job reductions, but it still misses the broader picture: some people can barely feed themselves.
Restaurants have a lot of competition, and low margins. Like any other employer, they can offer jobs at low wages (or at least could, until the government got involved). People are under no obligation to accept a job with low wages, but some do. By definition the employees are not slaves, because they can quit at any time.
Employers offer wages that the labor market will bear. Some jobs are mostly unskilled labor, and the pay is appropriate. Restaurant workers get tips, and I am usually very generous. Apparently tipping has become much less popular lately.
Notable exceptions to skill vs. wages include things like the Longshoremen in the Port of Los Angeles, who belong to a union that extorts the shipping industry. There is no justification whatsoever for the high salaries they earn.
> People are under no obligation to accept a job with low wages.
This is the wrong premise you are basing your entire conviction on.
When you don't have an alternative to working then it is not a jobmarket as you are not in a position do not transact.
This is the same reason why the housingmarket is not a market the second people do not have alternatives to buy into overpriced rents.
A free market requires that participants can decide not to transact. A pro-market government makes sure that this is is the case to a reasonable extend.
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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.
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This only makes sense if staffing is a major cost factor, which it isn't.
It is. Typically over 30%, higher in fast food.
https://www.5out.io/post/a-detailed-breakdown-of-restaurant-...
You need to factor rent increases into your thinking, both commercial and residential. Your breakfast spot is a business that no longer makes financial sense to operate.
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.
If everything you wrote above is true (and I have no reason to believe otherwise), then the labor market should self adjust to the local economy and the government shouldn't need to step in and dictate a minimum wage.
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.
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.
> 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.
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".
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.
> 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.
Have you actually looked at what Walmart pays? Even in areas where the minimum wage is still $7.25, they're paying nearly double as a starting wage. They raised their starting wage over $10 in 2017 and have consistently raised it even where they're not legally obligated.
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.
> 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.
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.
The Netherlands has a lower minimum wage for people under 21. This is why you see a lot of teenagers working at McD.
A big Mac is still 5 eurodollars.
No, it's not corporate welfare. Min wage hikes mean those workers unable to add that much value don't have jobs anymore, are left out of a workforce and thus cannot gain skills, and now require actual welfare.
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.
> 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.
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.
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.
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.
>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?
If one of these fast food places shuts down, it's not like the lot is just going to sit vacant forever.
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.
That isn’t what’s happening. A lot of these areas are permanently hollowing out far beyond fast food, at least with respect to local businesses. Lots of places in decent neighborhoods are boarded up and stay that way. This is an issue even in some cities with strong population growth.
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.
Sure, but this has nothing to do with the land values which are still extremely positive. It has everything to do with Prop 13 allowing speculation. Repeal Prop 13 and all of those lots will be better cared for and rented out.
> 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.
> 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.
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.
> 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
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.
The problem is that people don't understand that it's a market that determines wages, and instead think it's a number that employers just come up with off the cuff and minimum wage is the only thing stopping them from picking $1/hr.
Right. They also fail to understand that many low end jobs only provide very marginal value to companies and could easily be eliminated if the minimum wage exceeds that value. For instance, baggers at grocery stores hired as a convienence to shoppers and to speed up checkouts. But this is only very marginal value; customers and cashiers can do the bagging themselves and the negative side of that is only very slight to the business. It's an easy job to eliminate first, many stores these days don't have one. Low minimum wages create more jobs like this, which are good jobs for teenagers or people with intellectual disabilities.
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.
Don't you think it's a little unlikely that people, in this day and age, with the current political climate in the west, don't "understand that it's a market". I think it's extremely unlikely.
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.
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> Ignore the mock outrage of my sibling comment, they are uninformed.
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.
Ohh no, it's Jordan Peterson.
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.
There are a significant number of people with developmental conditions such as Fetal Alcohol Syndrome or Down's Syndrome who, realistically, are never going to be capable of generating $20/hr of economic value. The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.
Where I live we solve this in part with state sponsored offsets in wages. If you hire a person with a medically diagnosed handicap, you get some of the wages back from the government.
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.
>The higher we raise the minimum wage, the more of those people we condemn to permanent dependence on government aid.
Condemn?
You mean take care of the least among us, which is, as many have observed, a KPI for a just society.
I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.
>I support caring for those who can't care for themselves, but most people want to be able to make a positive contribution. Being taken care of is humiliating.
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.
[0] https://en.wikipedia.org/wiki/Let_them_eat_cake
A better approach would be to increase the Earned Income Tax Credit to help those people rather than distorting the labor market by increasing the minimum wage.
What do you think happened to the tens of thousands that lost their jobs? Are they homeless now?
I'd hope we could find something more productive for them to do.
Hope in one hand...
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.
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.
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.
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/
> 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.
Those are things that were previously being done by people that are now being done by machines. In other words, automation.
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.
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.
It's 100% lower wages for those who lost jobs.
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 $108 from taxes
Now everyone is paid at least as much as they were before, and fewer people are forced to perform labour
In practice it was only 3% unemployment not 10%, which means the tax increase is less and there is more of an incentive to continue working. You can also pay the displaced workers less than their original wage, to reach an equilibrium where everyone is happy with either work+more money, or leisure+less money. Or have it be age-based with an earlier retirement. Or have people work part-time.
We need to stop seeing having a job as being inherently good. Being able to live is good. Humanity should strive for 100% unemployment.
"Less work done" doesn't look like a positive change, you can't tax your way out of a smaller pie. Specially if you strive for humanity to produce no pie to start with.
I disagree that increased employment and increased labour always makes the pie bigger. If minimum wage was low enough, we would decommission our cement mixers and use a human with a shovel instead. But that's not an improvement. Automation is happening, jobs can be replaced right now. The problem is that humans are too cheap to bother automating, and that the profits of the automation are not being distributed to the displaced workers.
Then we should increase the minimum wage to 200$/hr or more.
The total salary would go down if you did that
Then we should just increase the presidential salary to 110% of the total 2024 US workforce salary.
Billionaires don't care about their salary.
They would if their salary were more than ten trillion dollars.
How can you know that? That's also such an arbitrary number to obsess about. Setting bilionaire income tax to zero would increase total salary also.
Paying more for less is never a positive change, it's an inefficiency that is costing someone and resulting in less goods for society. It's a net loss. That money paying for less is now not being spent where it was before, making that place lose out.
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.
Well, on the other hand, it can be seen as something like a eugenic program to cleanse society of those unworthy of the state. After all, there is nothing stopping them from going to work somewhere else where there is no such minimum wage.
Also consider non linear utility of money.
For hamburger flippers? A 25% increase in wage might well be superlinear for some of them (eg better circumstances and opportunities for kids)
Yeah but the other people lost their jobs and 100% of wages. So you can compare net utility gain or loss.
Yes but that’s not the argument you made.
I didn’t make any argument. I was expanding on parents point.
Yes and I was responding solely to your expansion, which I believe is inapplicable here.
They are working the same hours elsewhere for free?
They might be living in a tent on a sidewalk for free if you ban them from working.
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.
If they could get higher paying job they would already do so. No legal immigrant dreams of working at McDonalds. No illegal immigrant would be employed by McDonalds.
Why not set the minimum wage at $50? Why not set $20 for everyone?
More money in employees pockets means more jobs and more disposable income, after all.
Why not set very low maximum wage ceilings and have 100% employment? /s
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.
> Are you going to reduce lottery payouts
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.
> 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.
> They only did this because they couldn't pay him.
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.
Because that happens naturally without a law. People lower the wage they ask for until they get a job.
I think they were sarcastic.
Thanks, yes, I was trying to show how the alternative is absurd
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.
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".
Correct?
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.
One possible reason: People don't need a second job anymore.
> Small decrease in employment in exchange for ~25% higher wages for those employed?
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.
First, 2.3 to 3.9% decrease in fast food employment in a year isn't really small given only a fraction were affected by increase.
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.
What about all the people who are now priced-out from working at all because it is not economic for the business to employ them at these rates?
That was the original intent of minimum wages!
https://mises.org/mises-wire/racist-history-minimum-wage-law...
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.
One issue with a minimum wage is there isn't a great economic theory for what it should be. So even if this one had good effects, it doesn't mean $25 per hour would also have positive effects. It's also possible a personally beneficial outcome was a net-negative.
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...
If you assume the minimum needed for life is X, I’d say optimizing for the maximum receiving X+ is a better outcome than fewer getting X++
Maybe a good trade if it was just a loss of employment. But there are other downsides...like fewer hours and higher prices.
> overall sounds like a big success?
It depends on how many hours were worked. Which the paper did not measure.
Squid Games, in a nutshell.
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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.
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.
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.
That also goes for other fields as well. I've seen enough comments here on HN from people who thought their employer would offer them a Sillicon Valley wage if they moved to the middle of nowhere to live like royalty, often because they thought companies pay them based on how much value they add, especially when WFH became more widespread during COVID.
All companies pay people as little as they can to keep a certain amount of employees of certain quality around to do the work. The fewer options you have (or the more options your employer has), the worse the deal you'll have to accept becomes, and the lower your pay will be.
As for skills, I know plenty of people in IT who would go crazy working retail or interacting with customers within a month. Flipping burgers may be the easy part, but resilience against customer behaviour and monotonous/uninteresting work isn't something everyone has.
There is a huge difference in the quality of workers in fast food. Some people are slow. They are inefficient. They let things burn, they count change slowly, they are clumsy. They can't multi-task.
It is cognitively simple for you, because you aren't thick. But for people of well-below average intelligence, flipping burgers and doing something else at the time is just not possible.
> 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.
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.
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.
Source for that debunking? Because I sure as hell can walk into any Walmart and see it in action.
> it encourages looking elsewhere
Which is why the only rational position of a true believer in the free market is to abolish international borders.
I used to be a true believer in the free market and I did want to abolish international borders to enable free trade of labor. What I didn't realize though is that nobody wants to require immigrants to pull their own weight and exclude them from social welfare if they're unemployed, etc. If you had a very free market country with no social services that would be overused by unrestricted immigration, then yes, an open boarder might be a good idea. Perhaps this is similar to internal borders in China, which are reasonably open but immigrants from other provinces aren't eligible for social welfare and effectively have to go back home if they lose their job.
The 18,000 people who lost their jobs may disagree.
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-...
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.
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
https://us.fundsforngos.org/news/nonprofit-accuses-uc-berkel... https://epionline.org/release/biased-uc-berkeley-research-te... https://epionline.org/release/biased-uc-berkeley-research-te...
And the nation is currently ruled by somebody who orders rewriting past papers on climate science:
https://phys.org/news/2025-08-rewrite-national-climate.html
So why are we taking at face value that study from nber which is increasingly staffed by Trump loyalists?
The marginal value being too low is just the company being bad at optimizing. Yes, contrary to fairy tales, companies are not so good at this because internal politics and/or poor management.
My country switched from 39 to 35 hours maximum working time per week, some years ago, in order to reduce unemployment (we are talking about around 25M workers). The net result was that companies did not hire more people (or less than expected), they figured out ways to make their working force more productive.
> This is disastrous for someone who'd love to work at $x/hour
This does not exist, period. If x is below the cost of housing and eating in the area, it's not worth working, or it is a last ditch job that delays dying on the streets - that's the reality we are talking about. I am pretty sure that the minimal wage they set is just above that, unless I missed the memo and California became socialist.
> The marginal value being too low is just the company being bad at optimizing.
not really.
If there's a job for cleaning the sidewalk of a joint, or for holding up a sign, but this marginal value is very low, then a minimum wage greater than this value will prevent this productive work from being done (or it'd be done by an existing worker, at the sacrifice of some other productive work they _could've_ done). There's no way to "optimize" this.
Personally i am not a fan of minimum wage. I rather have tax payer money spent on creating valuable workers through training. There's lots of models for such programs - for example, an apprenticeship model, where a firm pays for the cost of an apprenticeship (which includes wages as well as cost of training), in exchange for an agreed upon number of years of employment at an agreed upon fixed wage post-training (they cannot quit or will have to pay back the cost of training for example).
> Personally i am not a fan of minimum wage. I rather have tax payer
Tax payer?
> in exchange for an agreed upon number of years of employment at an agreed upon fixed wage post-training (they cannot quit or will have to pay back the cost of training for example)
Well I've heard of such model once, a scam school used it for what basically was forced labor. Thankfully the contract was nullified by a court. It's not surprising to me, as I have heard too many stories of harassment and abuse at work.
There's not even a need for that, normal programs such as part-time school, part-time work paid half the minimum wage already exist in my country and are generally appreciated. But they exist mainly for skilled work only, such as engineer positions.
The issue is that you don't need much training for sidewalk cleaning, so "innovative" programs won't solve anything. What is needed is to push back against abusive practices caused by the imbalances of the worker market. Companies are predatory by nature.
> 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?
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
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
Living wage is a NIMBY problem, not a wage problem.
It's like thinking you can solve a GPU shortage by giving people more money to buy marked-up GPUs. That won't do anything except make GPUs even more expensive.
The solution is to build more GPUs. To build more housing.
EXACTLY. I've been saying the same thing for so long. As long as the imbalance of supply and demand exists the way it has, giving the lowest wage earners more money only bids up rents. There is no such thing as a living wage in a system of scarcity where buyers compete for necessities instead of necessity owners/producers competing for buyers.
I mostly agree with you but I do think the issue is a lot more complex than that. I do think there is a valid criticism based on market power abuse at the minimum wage in the food sector, for example, especially with the rise of chains over the last several decades and with labor markets at the low end being much more geographically constrained than most analysis of this situation appreciates. In my opinion there is a kernel of truth to the wage should be higher than minimum in many places if the market was functioning properly and had stronger competition but I kind of doubt that's more than a couple dollars and that is being used to push through bad leftist policies to push wages of their special interest groups up when their other policies are highly inflationary in the costs of basic needs like housing as well, which actively harms these people. it would probably help the low end a lot more having policy that generally pushes down the costs of basics (like getting rid of most of the zoning/approvals processes for building anything so people can build whatever fits the economics of the area on whatever land they want in areasonably short period of time, removing carbon taxes, sales taxes on basics, etc).
We've seen with GPUs that building more doesn't solve the problem. Large corporations buy up all the stock and the leftovers are still ridiculously expensive.
Unless there's something preventing the rich from treating supply as an investment to get even richer off of, increasing production only facilitates wealth collecting at the top.
That's not true. You are seeing a massive bubble in AI infrastructure unfold that is gobbling up gpus faster than we are increasing supply of gpus. That bubble will pop at some point (probably soon) and things will get more normalized int hat market too (unless that pop coincides with something really stupid happening like China invading Taiwan, which would take out massive amounts of production capacity)
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”.
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.
That's what you get after decades of relentless propaganda. Anything remotely socialist is completely taboo there.
"Decades of relentless propaganda" also known as the "the 20th century"
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".
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.
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
If unemployment insurance and state fmla pay are any indication, any cash payments will be driven into the same laggy rough to navigate bureaucracy by the coalition between the people who like being cruel to poor people and the people who think insurance is some kind of handout.
That doesnt follow. We already have welfare/handouts and it idnt hard to navigate, some people just need guidance doing so, which is available. 90% of people living on the street have a) a bank account and b) a smartphone
You also need an address that isn’t a P.o. box or a post office. Everyone I’ve talked to who has gotten unemployment or welfare compares keeping it to a part time job.
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I find it weird how people care so much about employment overall rather than sufficient employment. Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government. Which is to say it's a job that shouldn't exist. While I don't think minimum wage is really the ideal mechanism of determining this, it's obvious that paying somebody federal minimum wage is an immoral exploitative joke... But also it'd likely be even worse without it.
But more to the point, why do these people obsessed with work and jobs always think anything that creates any kind of job is "good" no matter how bad, dangerous, or poorly compensated? Jobs that amount to licking poison for nickels in a country where you we could probably quarters the lowest currency denomination without issue somehow being "good" for the lockers is ludicrous. Low wages have massive negative externalities for society.
> Like if a job doesn't pay enough for people to comfortably have a family and leasure time, to me it's somewhere in spectrum of slavery, indentured servitude, and poverty trap, and not compatible with a society of equals and representative government.
So should a teenager, just entering the workforce, should be paid enough to support a family?
I’d rather sacrifice a living wage for the opportunity of upward job mobility, that’s the metric I really care about. It’s not the job you start with that matters, it’s the job you end with, and how long it takes to get there.
I don't think people expect one income to support a family anymore. Two working parents has become the norm for all but the highest earners.
But yes, two teenagers may very well need to support a family. All it takes is one broken condom and being born in the wrong place at the wrong time.
There's not a lot of upward job mobility for most people. We can't all be CEOs. Even if that teenager has aspirations for a bigger career, they'll have expenses like college tuition, books, and travel.
>Low wages have massive negative externalities for society.
The alternative to low wages isn't necessarily high wages. It could also be zero wages, as the study in the OP demonstrates.
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
Having lost a job suddenly, any employment is better than none. A perfect job that provides everything you need is pretty far detached from "this is sufficient", or even "this will slow my fall while I work something else out", and this kind of bitter resentment towards anything less than a job that pays out an idyllic American existence is what causes them to be priced out by legislative fiat like the minimum wage.
More to the point, not every skill level or job is _worth_ that kind of compensation (as uncomfortable as it might be to entertain), and attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages' -- which are as much a system of slavery as gravity or magnetism, and just as resilient to ideation.
> More to the point, not every skill level or job is _worth_ that kind of compensation ...
This is a fair stance to take, but you need to accept the consequences of the stance when people get desperate.
> attempts to circumvent market forces by making lower wages illegal at some arbitrary point have substantially more damaging externalities than 'low wages'
A population of people who can not feed themselves are going to kill you on the street for the canned tuna you might have in your bag.
> Having lost a job suddenly, any employment is better than none.
While this is true for you it is not true for the society as a whole.
This entire comment seems be written with a complete disrespect for macro dynamics and taken right out of a hunter gather society.
It completely ignores everything modern governance - and it is quite frightening.
In catastrophic circumstances perhaps, but the metric for actual starvation in the US is so low that finding a solid figure is difficult. Malnutrition, while higher, seems strongly correlated to child/elder abuse/neglect, and not homelessness. Street muggings for nourishment by a starving underclass is a fantastical and disingenuous narrative. And, surely, you see the dissonance in suggesting that poverty leads to crime, while also suggesting criminalizing low-wage labor?
> While this is true for you it is not true for the society as a whole...
Why isn't it? What about using the legal, practical market means at your disposal is exclusive to some privileged section of society, and why does it include me and nobody else in hard times?
Your 'rebuttal' is just a broad, dismissive gesture to theory and platitudinous insults.
I agree everything people might want done isn't worth the cost of having a human do it. But I don't see why such jobs should exist. I also don't think the base level of welfare needs to "idyllic," but enough for everyone to act as good citizens without being trapped in cursed doom cycles of impoverishment.
In general, though, it wouldn't matter what the minimum wage is if everyone had a sufficient level of general welfare without working...
Which goes to show that rather than minimum wage we ought to have a welbeing floor, perhaps with UBI, perhaps based on keeping key costs, like food, housing, healthcare, and education minimal.
You find it weird people don't want to starve? It may feel weird to you in your ivory towers but people still want to live no matter how demeaning their life gets.
Jobs are a product of the economy. In the end their prices (wages) move with market forces. The only way you deal with scarcity is by increasing supply (i.e. boosting industry), but alas there's always "intellectuals" like you sneering down on it as if people should just choose to die instead.
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.
> 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.
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.
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?
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.
Sweden does not have a minimum wage but does have strong unions which negotiate wages on behalf of workers.
Norway has minimum wage for some sectors (including unskilled labor), these minimums are also due to strong unions and collective agreements which have become law.
Denmark, no minimum wage but strong unions and collective agreements.
Finland has no legal minimum wage but also collective bargaining mandates minimum salaries.
All of these countries have strong social security nets.
> None of the Nordic countries have a minimum wage
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.
> Never was minimum wage equivalent to a living wage.
“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.
The whole idea doesn't make any sense. One person's "living wage" (the one with 7 children) is another person's luxurious lifestyle (the one in a DINK marriage)
> 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.
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).
Does that apply to all of the VC backed companies that are losing money? How many companies in CA that are paying minimum wage have the ability to be sustained for years by investors?
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.
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.
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.
> 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.
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?”
> “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.
In Europe we manage to pay fast food workers pretty well, including 5 weeks of paid vacation. Minor part timers earn a bit less but still good. And people can still afford burgers.
Fast food places have to compete with strong unions jobs like grocery stores as well.
Unfortunately Europe has stagnant growth and facing population collapse.
Of course you can offer an easy life when you are burning reserves and ignoring the future.
> Unfortunately Europe has stagnant growth and facing population collapse.
Unfortunately our US counterparts think "growth" means getting obese and dying younger than us:
- https://www.worldometers.info/demographics/life-expectancy/ (48-th place in longevity, not bad, almost as good as Albania, one of the poorest and least developed countries in Europe that's not even in the European Union)
And being much much unhappier than us: https://data.worldhappiness.report/table (24-th place, not bad for people so invested in being #1).
I think where the US does shine is in obesity ratings, that's where we see the real meaning of "growth": https://en.wikipedia.org/wiki/List_of_countries_by_obesity_r...
> Of course you can offer an easy life when you are burning reserves and ignoring the future.
You mean burning calories and looking forward to pension age? The first one Americans need more of, and the second one, sadly, not many Americans live to see.
You're right, we should let the rich get richer.
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.
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.
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.
typical bootlickers response to deflect from uplifting lower class people. Either move it to crying illegal immigrants or they already have enough with social welfare lol. It's amazing how you'll defend top 1% getting tax cut's when we need a small part of it actually help avg. person's anxiety of not living paycheck to paycheck.
Decades of tax cut's for top financial class did not workout of everyone else, the extra money did not trickle down but was used to buy politicians to get more tax payer money
Raising minimum wage will close down businesses depending on exploitation and help businesses who are ethical enough to give working class their fair share.
We know what uplifting lower class people looks like - the formula that works as seen in Asia, Europe and the US was masses of factories, lots of capital investment and tolerating high pollution. Minimum wages don't seem to be part of the equation. If this was about 'uplifting' people then the law proposed would be positive (ie, what should they be doing instead of working in fast food) instead of a negative one (people who can't justify a $20/hr wage can't be employed in fast food).
Border controls and dealing with illegal immigration is under federal jurisdiction. What do you expect California to do about it?
How about not encourage and exacerbate illegal immigration? https://mayor.lacity.gov/news/mayor-bass-issues-executive-di...
where's the raid on drug sellers, distributors or human trafficking. Avg people trying to make living getting arrested right at court's doorstep is not crackdown on crime by illegals.
some guy working 8-12 hours shift, has family and participate in community programs is suddenly getting deported to nowhere is making America safe again ?
This looks more like making lowest white people better than everyone else
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.
It's been a generation since minimum age workers were mostly high school kids.
And now it's what, temporary immigrant visas?
https://usafacts.org/articles/minimum-wage-america-how-many-...
> 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%.
>2.3% of hourly workers ages 16 to 24 earn $7.25 an hour or less, 1.2% of hourly workers ages 25 to 34 earn the minimum wage. Less than 1% of hourly workers older than 35 years old earn the minimum wage.
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).
> 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.
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.
This is in stark contrast to the Berkeley Institute for Research on Labor and Employment study that claimed the law had no negative effects on fast-food employment.
The Berkeley study has been cited quite heavily by policy makers.
https://irle.berkeley.edu/publications/brief/effects-of-the-...
This group is well known for bias, over and over through the years. Nothing they report should be taken at face value.
"A considerable amount of financial support for the Center comes from labor unions: According to federal reports, over the last 15 years it has received nearly $1.2 million in labor funding."
"The IRLE’s highest-profile researcher is Michael Reich, who co-chairs its Center on Wage and Employment Dynamics. Reich made a name for himself at a young age co-founding the Union for Radical Political Economics, with the stated goal of supporting “public ownership of production and a government-planned economy.”"
https://us.fundsforngos.org/news/nonprofit-accuses-uc-berkel... https://epionline.org/release/biased-uc-berkeley-research-te... https://epionline.org/release/biased-uc-berkeley-research-te...
In contrast the study that's linked by OP is funded by:
Amazon, giant banks, ExxonMobile, Google, Microsoft, investment firms.
https://www.nber.org/about-nber/support-funding
Well unions are not for profit so even if they funded a study they don't have as strong incentives to influence the study's outcome. That's different from when the study is founded by for profit entities. No?
You have made a good case for a close reading of the study. Are they wrong? Is the methodology bad?
This is based on my very quick reading of the studies so take with grain of salt. The NBER study (OP) studied the entire fast food worker industry using data from BLS, whereas the Berkley study cautions against using BLS because it applies to the entire industry. The $20 minimum wage requirement only applied to fast food workers who work at limited service restaurants with 60 or more chains.
If your concern is only for who the $20 minimum wage was supposed to affect, then there was likely no decrease in jobs based on only that data. However, since causes have effects on more than one intended group, it's very likely that the $20 increase did reduce employment overall and the Berkley study was very careful to downplay that data as not being useful for the purposes of their study, even though they are related. The effects on one part of the industry can affect the rest and to ignore it is a questionable choice.
Even their abstract seems biased:
"...and price increases of about 1.5 percent— or about 6 cents on a four-dollar hamburger."
Ah, yes, the fabled four-dollar hamburger. I know I never need to spend more than 4 dollars nowadays when I get fast food.
A hamburger is at McDonalds is $1.89 in my area, a McDouble is $3.29. The double cheeseburger is $3.99. What they call the "daily double" which is a silly name for a hamburger with the works is also $3.99.
I don't think using the basic burgers is a bad choice since specialty burgers probably don't compare well across chains.
They did a study of Seattle’s minimum wage that did not hold up well in subsequent studies, in part because their assumptions about how adverse effects would manifest were poor. They seem to have memory-holed that. Seattle’s minimum wage is higher and more broad based than California.
Regardless, with the passing of time the adverse effects have worsened to the point that even proponents in Seattle acknowledge there are serious issues that have resulted which need to be addressed.
California looks like it is trying to speedrun Seattle’s mistakes.
Is this true? I don't agree with the point of view of Seattle politicians but I've never seen even a hint of them acknowledging problems with their approach to anything. If anything the politics seems to be moving further left, after a very brief shift due to the truly disgusting state of the city during COVID.
The Berkeley report doesn’t count number of jobs. It looks at pay and number of restaurants operating (both went up).
It could be that part time positions decreased but full time positions increased, along with hours per job position / total hours / hourly pay and restaurants operated. That’d be a good thing for everyone involved (except maybe the cardiovascular health of the customers), and is compatible with both studies’ conclusions.
"Relative to employment in the fast food sector elsewhere in the United States" .. could drive a truck through that "elsewhere".
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.
Circa 1992 would the area be increasing in population and so employees to service that volume?
I’ve seen some interesting research suggesting that higher minimum wages lead to lower turnover, which can lead to some very real cost savings. I had an interesting epiphany while watching a business lecture about calculating costs associated with hiring, that there are very real points in the minimum wage curve (which should be laffer shaped) where raising the minimum wage has the potential to both increase labor participation and decrease total labor costs.
I now like to joke that minimum wage laws are subsidies for businesses too dumb to factor in hiring and turnover costs.
Welfare is also kind of a subsidy for low paying employers.
If Walmart doesn’t pay enough for its employees to afford to live, then the government steps in with ebt and housing vouchers, etc. to make up the difference.
That’s money Walmart isn’t paying. In fact, they get to kind of double dip. As those employees will likely shop there. So the ebt gets spent there. The government essentially pays Walmart to feed its employees.
The employees are being double hit. Because their income is still taxed, then they essentially get scrip that they’ll likely have to spend at the place where they work.
It’s why you’ll also never see any real movement on the welfare issue. It’s a way to funnel tax money to the rich via poor people.
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.
> a few will fire someone
> all employees win
I'm unsure you can make any conclusions here. The employment in the fast food industry went down, but we don't even know if it caused more unemployment. Those workers might have all found a better or similar paying job in another sector.
Without that information, there's nothing to learn here, exception those still employed in the fast food sector now make more money.
Yah. I mean, magically they are all CEOs now, kinda crazy, right at the same time minimum wage went up. The lord works in strange ways.
Really no. All you have to look at is the number of total jobs and now unfilled jobs. We don’t need to know about the people and them magically becoming CEOs.
Ontario fast food minimum wage, $17.20. California’s $20. And the cost of living there is higher. Our fast food places, and whatever you call the next tier is doing just fine - the damn things are everywhere. Hard to find something that’s not some kind of chain. Probably a whole lot of takeaway or delivery, but things seem to meet society’s needs without decimating budgets. Maybe it’s a balance of having real workers and moderating profits for the longer term?
The vast majority of fast food workers in Ontario are foreigners working on visas.
And plenty of them are exploited and forced to kickback a part of their wages to the owner. The government does nothing and the owner gets below minimum wage workers.
It’s shockingly common in Canada.
You see this in other countries as well. They pay decent wages to fast food employees and don’t play the tipping game either.
Prices aren’t out of control and service is decent.
While pitched as “helping people,” California’s fast-food minimum wage law has a different goal: reshaping the state’s tourism appeal. By making dining out feel more distinctive (and by nudging the market toward small restaurants and local chains) it’s a strategic play to make California a cooler place to visit and eat.
That’s how I’ve interpreted it - because otherwise, it makes little sense why the wage for the same work would vary based on the size of the company.
You're giving way too much credit to the emergent intelligence of the CA legislature
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.
As restaurants are replaced with robotics there will be severe job losses to this sector. Temporary measures cannot alter the greater transition.
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Isn’t it fascinating if you raise the minimum wage some people say it destroys jobs but when people get fired because of things like robots and AI the same people claim it’s no problem because it those things that killed the jobs create just other jobs.
More money to spend also creates jobs
This is a side question, but, are people in California now not expected to pay the extortionary tips American businesses expect?
Whenever I pointed how backwards were the tipping expectations in the USA for anyone from Europe, the excuse was always that those tips would compensate the low wages paid in the food industry. Well, now that they have a standard minimum wage, are they doing away with the tipping practice?
If a business can't provide a living wage, it shouldn't exist. It's really that simple.
Imagine doing this analysis on the effects of requiring a business to pay it's slaves, and coming to the conclusion that some slave-based businesses would have to close, since their business model was so skewed, it could only function with slave labor...
Who cares! We don't want a world with companies that can only work with those kinds of business models!
Slave labor shouldn't subsidize artificially low priced products and artificially inflated executive salaries... the end.
Except that the study found California economy grew faster than states with low minimum wages. The law is actually necessary for growth. Conservative economists just lied, nobody thought this was actually going to cause unemployment.
This is the message.
One of the reasons why equality is so freaking important for a market economy is because it lets more people participate in it - equality is prerequisite for a market economy (and a democracy, but that is another discussion)
This is a crazy take. It’s not the company’s responsibility to provide a safety net. It’s the government’s and the government should collect taxes to do so.
We already have a system for this in theory - the Earned Income Tax Credit. The program use to be widely supported by both Democrats and Republican administrations.
What’s a “living wage” anyway? It’s not the same for a single mother of 3 as it was for my then teenage son.
And I find it rich for people on HN to say that companies that can’t afford to pay its workers are commenting on a site run by a VC fund where almost none of its companies could afford to pay anything if they weren’t being propped up by investors and most of the companies will never make a profit
What's funny(in a sad way) is that there are arguments made regarding labor to pick crops saying we need migrants because local labor won't do the work for cheap and regarding manufacturing saying that cheap labor enables us to have a higher standard of living.
Is it really that simple though? Aren’t there cases where if those same people would otherwise be unemployed, society might be better off having the perks of that business’ existance, and subsidizing those workers up to a living wage using tax $?
Thank you for stating this so simply and clearly.
It's absurd to see so many commenters, who are probably mostly wage earners, mindlessly repeat the right wing propaganda. Civilization needs some minimum decency.
You're a tool... of landlord propaganda.
There is no such thing as a living wage in a housing market like this. The recent bill in WA to control rents limited rental increases to the rate of inflation plus 7% (or a flat 10%, whichever is lower). So when inflation is at 3% every year, and rents rise 10% every year, how long before someone who gets a 5% annual raise (40% higher than the rate of inflation) can't afford rent?
As long as the rental market cannot meet rental demand, raising wages just bids up rents. No more people get housed or are able to create savings to weather emergencies. All that money just gets transferred from business owners to landlords, using minimum wage workers as mules to transport the money.
Your bias is demonstrated by the fact that you seem to think this is all about greedy business owners and you put ZERO responsibility on the landowners and politicians who have perpetuated this housing crisis.
Meanwhile, in states without property tax caps, overheated housing markets raise the property taxes of seniors until they can no longer afford their homes, even if they're paid off. My property taxes are still just a fraction of my mortgage but they've more than doubled in the past 8 years and in another 8 years I'll be 64 and likely pay more annually in property taxes than in mortgage payments.
So seniors and digital nomads sell their ridiculously overpriced homes in superheated markets and take those profits to cooler markets, increasing property values and property taxes, which may seem like a benefit until it heats up the local housing market too much.
But we saw Marc Andreessen and his wife demonstrate their nasty NIMBY values trying to stop a measure increasing housing density in Atherton, California a few years back. The same hero of VC who invested 9 figures in Adam Neumann's housing startup doesn't want any of the plebes it would serve within a bike ride of his home.
Interesting perspective. I need a paragraphs worth of text translated once a week by a native speaker. Should my biz not exist or am I allowed to use "slave labor" fiverr?
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.
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.
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.
Could it be that with a higher minimum wage, more people work these jobs full time, thus reducing the number of people employed part time? If the same number of hours are produced with a lower number of workers that should be a plausible explanation, yes?
If there is a correlation, and the correlation is causal, I'm not sure how this matches with every fast-food restaurant near me having "hiring, start immediately, no experience needed" posters outside.
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.
> 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
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 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.
Betteridge's law of headlines: https://en.wikipedia.org/wiki/Betteridge%27s_law_of_headline...
As someone who kinda followed this debate for a while, I will point out that there is actually a large split down the middle of the on whether minimum wage increases decrease employment. And that split isn't actually due to ideological bias (which is the usual accusation), but rather methodology: almost all of the studies which confirm employment reductions use one methodology, and almost all of the studies which do not confirm employment loss use another methodology, and there is a large debate in econometrics as to how reasonable the assumptions are for each of the two methodologies.
One thing that always seems to be at a disconnect between the economic literature and policy makers is the economic context of the raise in wages. Even those economists that have bought in fully that minimum wage increases don't typically decrease employment will have several caveats to that statement, usually worded in the form of "small increases in the minimum wage". That is to say that there are often small inefficiencies in our current markets which allow employers to reduce wages in cartel-like fashion, and small increases in the minimum wage can claw some of that back in favor of the employees at the expense of employers' economic rents, but not at the expense of economic output. But large increases in the minimum wage absolutely can jump the shark, decreasing economic output by effectively making low margin sectors untenable entirely. If that weren't the case, we would be able to raise it infinitely without any negative effects, which is absolutely absurd (and unfortunately that is the takeaway that ideologues often get from reading abstracts).
A more useful economic model would go a step further than just saying "you can raise the minimum wage without harm to the economy", by incorporating econometric analysis which can accurately predict when and how much you can raise it without incurring economic harm.
Really, one can only truly understand the term "labour aristocracy" after reading this comment section. People show 0 solidarity towards people of their own class. The west is doomed.
In my medium size CA town, the Burger King just flat out closed. Other than long johns silver in the 1990s, I've never seen a major franchise just quit and close.
Why is the entire discussion between: "people should be able to pay rent and buy groceries and maybe save a little money on minimum wage" versus "those greedy poors"? I mean 10% of the US population are millionaires, we're all paying billionaires' taxes so they only have to pay a pittance, and soon we'll have a trillionaire. But no, screw the minimum wage workers, they should work extra jobs ... we'll never tax the rich what they owe, they are worshipped like gods.
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unemployed but at least they will live longer lol
I'm a tax evader haha
Real question: If government-mandated wages are good policy, why not set the minimum wage to $50/hr?
Why not $100/hr?
Because if the minimum wage is too high, employers can't afford to pay it, so it will just result in reduced employment rather than wages going up, aka economic "deadweight loss".
That much is obvious. What is in question is the effects of more realistic minimum wages like this one. Some claim that _any_ minimum wage will only result in deadweight loss, which is true in simplified models, but the effect in the real world is not so clear, hence the need for this type of research.
Yes, I agree: this research shows that governments do a poor job when they attempt to set minimum wages, and they would do better to focus on accomplishing income redistribution policies through the tax code.
When government tries to set minimum wages, they often result in job losses (or foregone jobs that were never created) which, as you wrote, is known in economic circles as "deadweight loss."
It's not that people shouldn't have a minimum standard of living, it's whether we are going to take easy and ineffective routes to solve the problem that look good on paper and in commercials or whether we can have the adult discussion about the monetary system and how it affects citizens.
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.
> 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.
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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.
> 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.