Economist says, you're paying more for minimum wage increase
More than a year after California raised the minimum wage for fast food workers from $16 to $20 an hour, employers are now bracing for another possible increase.
As FOX26 news first reported to you last month, California's Fast Food Council announced that it would vote on a new 70 cents-per hour minimum wage increase at its next meeting.
That announcement now renewing the fierce debate that started even before Assembly Bill 1228 went into effect, April 1 of 2024.
So, a year after that first, historic wage hike, how is that working out for us?
Online headlines from a slew of recent articles reflect that debate, most of which centers around wether or not the higher minimum wages have caused job losses.
Last week we told you about the latest study on the subject from Pepperdine University released April 1 of this year.
It found, ".... revised employment estimates show a decline of over 23-thousand-100 jobs, or 3.2%, in the limited-service restaurant sector over the past year."
Another study came up with similar findings, but now an economist from Stanford's Hoover Institution says, claimed job losses may not be the only price Californians pay for the minimum wage increases.
Policy felow Jon Hartley, says and shows us with a chart he posted on X, it is now costing us all a little more everytime we pick up a fast food meal..
"And when you look at restaurant fast food restaurant prices in California," Hartley described, "and you compare them to fast food restaurants around the rest of the country outside of California, there's a pretty substantial difference. If you look at how those prices have evolved before and after the policy in California versus outside of California, what you find is that there's really a difference of around, you know, say somewhere between 4% to 5% in terms of the overall price impact."
Hartley says no other state in the nation experienced price increases even close to the size California experienced during that time.
Hartley says he got the data he analyzed from the website called Data Central which he says track's restaurant food prices.
FOX26 news contacted the Governor's office about Mr. Hartley's findings and those from the Pepperdine study.
We received a response from Tara Gallegos, the governor's Deputy Director of Communications, saying in part,
"The Hoover Institute should know that food prices are impacted by more than just wages... would point you to national data showing that U.S. consumers now spend 3.4% more on eating out than they did last year."
Gallegos also cited a recent UC Berkeley study that she says found that in California, "... menu prices increased by only an average of 1.5% (when compared to 20 states that have not changed their minimum wage since 2009) —equivalent to about 6 cents on a $4 hamburger."
Finally gallegos added, "The Hoover Institute continues to create reports using industry trade group data so faulty they have since been completely retracted."
Gallegos also included a number of articles that she says contradicted those findings. That list of articles is below.
The California Fast Food Council is expected to vote on the new minimum wage increase at it's next meeting later this month or in May.
The Hoover Institute should know that food prices are impacted by more than just wages.
Would point you to national data showing that U.S. consumers now spend 3.4% more on eating out than they did last year.
Yet, a recent UC Berkeley study found that in California, menu prices increased by only an average of 1.5% (when compared to 20 states that have not changed their minimum wage since 2009) —equivalent to about 6 cents on a $4 hamburger.
The Hoover Institute continues to create reports using industry trade group data so faulty they have since been completely retracted
Original “study” RETRACTED: "California Loses Nearly 10,000 Fast-Food Jobs After $20 Minimum Wage Signed Last Fall"
Study #2 RETRACTED: Unhappy Meals
Study #3 RETRACTED: California Has Lost 410,000 Jobs. With a New Bill, More Could Be on the Way Out
Study #4 RETRACTED: California’s Businesses Stop Hiring
Study #5 RETRACTED: California’s New Fast-Food Minimum Wage Law Destroys Another 1,250 Jobs
As a reminder, here is the bias of the Employment Policy Institute – frequently cited by Hoover, which a recent San Francisco Chronicle article identified why they are pushing this false narrative:
“The results 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.’”
Additionally, would point back to that UC Berkeley study, which found:
- Workers covered by the policy saw wage increases of 8 to 9%, with no negative wage or employment effects on non-covered workers.
- No negative effects on fast-food employment.
- The number of fast-food establishments grew faster in California than in the rest of the U.S.
- Menu prices increased by only an average of 1.5%—equivalent to about 6 cents on a $4 hamburger.
Additional worker perspectives and impact on businesses' bottom line below from other reporting on this topic for your awareness.
- "'Moments like these are some of the best parts of the job,' Pizano said, recalling when she notified staffers about the wage increases. Some are moms supporting families...”
- “’The increased pay is helping with worker retention,’ Raising Cane’s said."
- “It’s attracting better workers”
- “Average profit per restaurant increased $6,000 last year, he said.”
- “She said she could pay both ‘at the same time’ and still have money left over ‘to take my family to do things and have quality time with them’.”
- “A review by the Economic Policy Institute in September found this narrative [job loss] to be ‘largely wrong’, citing that most minimum wage studies find little to no effect on employment.”
Tara Gallegos, Deputy Director of Communications, Office of Governor Gavin Newsom
