A brand new research revealed by the Nationwide Bureau of Financial Analysis (NBER) this month discovered that California’s 2023 minimal wage hike value the state hundreds of jobs.
Researchers discovered that the state’s $20 minimal wage quick meals hike has value the fast-food sector 18,000 jobs because it went into impact in April 2024, representing a 3.2% decline in that sector in comparison with fast-food sectors in different components of the nation.
“Our median estimate translates into a loss of 18,000 jobs in California’s fast-food sector relative to the counterfactual,” researchers Jeffrey Clemens, Olivia Edwards, and Jonathan Meer wrote in their paper.
The California meeting handed AB 1228 in Sept. 2023, which established the state’s “Fast Food Council” and its capability to set and regulate the sector’s minimal wage.
Moreover, the invoice, signed into legislation by California Gov. Gavin Newsom the next April, established a brand new minimal wage for quick meals employees, which was beforehand $16 an hour.
“The hourly minimum wage for fast food restaurant employees shall be twenty dollars ($20) per hour, effective April 1, 2024. Thereafter, the council may establish, pursuant to this subdivision, minimum wages for fast food restaurant employees that take effect on an annual basis, beginning on January 1, 2025,” textual content of the invoice learn.
The analysis discovered that within the yr for the reason that invoice went into legislation, California’s quick meals employment contracted whereas quick meals employment across the nation expanded.
“Following AB 1228’s enactment, employment in the fast food sector in California fell substantially, with estimates ranging from 2.3 to 3.9 percent across specifications, even as employment in other sectors of the California economy tracked national trends,” the researchers acknowledged, noting that employment in the identical sector elevated by round “0.10 percent” across the nation.
The paper famous that previous to AB 1228 going into impact, California’s fast-food sector “was on a similar path as the rest of the United States prior to AB 1228’s enactment.”
Critics slammed the wage hike within the wake of the research.
In a column for The Every day Sign, The Heritage Basis financial professional Rachel Greszler wrote, “When it comes to central planning, history keeps the receipts: Wage controls never work. That’s because policymakers can set wage laws, but they can’t outlaw the consequences.”
Greszler added, “The consequences of that wage hike on the fast-food industry should be a warning sign” for town of Los Angeles particularly, after it just lately voted to extend the minimal wage for resort and airport employees to $30 by 2028.
The Wall Avenue Journal editorial board stated Monday that the notion a considerable minimal wage hike helps the economic system is “magical thinking.” It additionally criticized New York Metropolis mayoral candidates Andrew Cuomo and Zohran Mamdani for proposing related wage hikes if elected.
“The Democratic Party’s socialist nominee for New York mayor, Zohran Mamdani, has called for increasing the city’s minimum wage to $30. Andrew Cuomo, his supposedly more moderate competitor, wants a $20 minimum. These guys will never learn because they don’t want to see the world as it really is.”
Newsom’s deputy director of communications Tara Gallegos disputed the findings of the piece, declaring to Fox Information Digital that the analysis paper was linked to the Hoover Establishment, a public coverage suppose tank she claimed has revealed “false or misleading information” about California’s minimal wage hike “that later had to be completely retracted.”
Gallegos additionally shared a San Francisco Chronicle article from Oct. 2024, which acknowledged that the outcomes of the wage hike “defy a lot of the doom-and-gloom predictions made when Gov. Gavin Newsom signed AB1228 back in September 2023. Many of them originated with a survey conducted by the Employment Policies Institute, a think tank founded by a former restaurant industry lobbyist named Richard Berman — once described by TIME Magazine as ‘the wage warrior’ who ‘has been publicly railing against the very idea of a minimum wage since at least the late 1980s.’”
Moreover, the Newsom staffer cited a research from a UC Berkeley professor on the $20 wage hike from February, and identified a number of of its findings.
“Workers covered by the policy saw wage increases of 8 to 9%, with no negative wage or employment effects on non-covered workers, she said, adding there were “No negative effects on fast-food employment” and that “The number of fast-food establishments grew faster in California than in the rest of the US.”
She additionally identified, “Menu prices increased by only an average of 1.5%—equivalent to about $0.06 cents on a $4 hamburger.”
The Berkeley research checked out fast-food sector knowledge from when the invoice was enacted in April 2024 up till mid-Dec. 2024.
