04/03/2024
$20.00 minimum wage for certain 'fast food' restaurants in California.
Consider other small businesses struggling to stay in business and now having to compete in the labor market with a $20.00 minimum wage mandated for a certain segment of the job market. There is a snowball effect with wages. Payroll taxes and certain insurances are based on payroll and will therefore increase as well. So a $4 wage increase can be a much larger expense for the employer. Then people who were working for $20 or above will expect an increase in pay as well. It snowballs! (Increases rapidly for those not familiar with the cliché)
Another result will be the increase in the cost of fast food items. Those who frequent fast food restaurants will be affected by the higher prices, perhaps affecting lower wage earners more so than higher wage earners.
An unknown is how the fast food industry will react to the new law. There is a limit to how much increased expenses a business owner can absorb. If a business owner can't make money being in business, the business owner can shut down the business. If a business owner has to 'pay' to be in business, why stay in business?
There might be a reduction in employees resulting in a harsh working environment for the remaining employees. There might be more extensive automation than we've already seen in order to eliminate the need for employees. Other employee benefits and perks may be eliminated.
There will also be an increase in the rate of inflation as all industries, now required to compete with fast food restaurants for employees, will have to raise wages (and prices) in order to stay competitive in the labor market.
There is going to be a massive economic repercussion of this union sponsored law signed by Governor Newsom.
