$20 minimum wage for Fast-Food workers in California [LOCKED DUE TO POLITICS / COVID]

[T0RM3NT]

Thoughts or comments?

I get the idea surrounding paying these folks a wage they can live on, however, I'm not sure how the business model for the typical fast-food restaurant is going to achieve this without raising prices out of touch for the average consumer looking for a quick burger and fries or whatever they serve.

It's not going to end well is my initial thought.

Chime in! I would love to hear competing thoughts or arguments on the topic.

[Honda]

Raising minimum wage will raise prices for sure then raise standard of living. Then 20 minimum won't be enough anymore and the loop will continue...

[Car-Addicted]

Take your pick!

The real tragedy of minimum wage laws is that they are supported by well-meaning groups who want to reduce poverty. But the people who are hurt most by higher minimums are the most poverty stricken.
Milton Friedman

Labor, being itself a commodity, is measured as such by the labor time needed to produce the labor-commodity. And what is needed to produce this labor-commodity? Just enough labor time to produce the objects indispensable to the constant maintenance of labor, that is, to keep the worker alive and in a condition to propagate his race. The natural price of labor is no other than the wage minimum.
Karl Marx

Me I'm going with Milton Friedman

[peelerec]

There is no winning as others have stated. What I am curious on as I am ignorant with history, is how the minimum wage was a livable wage before the 70's. What has changed?

[Honda]

Originally Posted by peelerec

There is no winning as others have stated. What I am curious on as I am ignorant with history, is how the minimum wage was a livable wage before the 70's. What has changed?

In the 70's things were not as expensive as it is now with relative to salaries. Unfortunately, prices have got to insane levels but salaries didn't catchup with that.

This is where the government should step in and control. Unfortunately that will never happen in U.S

[peelerec]

Originally Posted by Honda

In the 70's things were not as expensive as it is now with relative to salaries. Unfortunately, prices have got to insane levels but salaries didn't catchup with that.

This is where the government should step in and control. Unfortunately that will never happen in U.S

Right, I understand the overall cost of life is more expensive, but what is the true reason... is it truly that companies are struggling to make livable margins, or have they gone the other way and make exorbitant margins......
I know every industry is different which is why I am ignorant relating to food industry and of the like.

[Car-Addicted]

Originally Posted by Honda

In the 70's things were not as expensive as it is now with relative to salaries. Unfortunately, prices have got to insane levels but salaries didn't catchup with that.
This is where the government should step in and control. Unfortunately that will never happen in U.S

I'm going to assume you're a youngster?

History 101: Price controls don’t work
President Richard M. Nixon imposed wage and price controls on Aug. 15, 1971. Oil and gas were two of many commodities affected. An initial 90-day freeze turned into more than 1,000 days before the controls were dismantled. Inflation — just above 4 percent in 1971 — was in double digits when the controls were lifted.

Nixon kept the wage-and-price controls on oil, gasoline and petroleum products in place, as did Presidents Gerald Ford and Jimmy Carter. The results were disastrous. Oil exploration and domestic oil production slowed sharply. And foreign oil poured into the nation’s gas tanks, filling the booming demand for price-controlled gas.

Thanks to this misguided policy, gasoline lines snaked along highways for hours during oil crises in the mid- and late-1970s. Stations ran out of gasoline and laws told consumers which days they could purchase gas. A windfall-profits tax compounded all the negative effects, and the shortages lasted until President Ronald Reagan repealed controls in 1981. The price of a gallon of gas at the pump fell by a third over five years.
Drawing on experiences of the 1970s, the FTC concluded that price controls meant “gasoline shortages could result,” leaving consumers worse off.

The history lesson for this Congress could not be clearer. Price controls could create shortages and leave our economy dangerously exposed to disruptions in supply. In the 1970s, we were the only nation on Earth to have gas lines. Why would anyone ever want to go back to that?
https://www.chicagotribune.com/2007/...ols-dont-work/

[Honda]

Originally Posted by Car-Addicted

I'm going to assume you're a youngster?

History 101: Price controls don’t work
President Richard M. Nixon imposed wage and price controls on Aug. 15, 1971. Oil and gas were two of many commodities affected. An initial 90-day freeze turned into more than 1,000 days before the controls were dismantled. Inflation — just above 4 percent in 1971 — was in double digits when the controls were lifted.

Nixon kept the wage-and-price controls on oil, gasoline and petroleum products in place, as did Presidents Gerald Ford and Jimmy Carter. The results were disastrous. Oil exploration and domestic oil production slowed sharply. And foreign oil poured into the nation’s gas tanks, filling the booming demand for price-controlled gas.

Thanks to this misguided policy, gasoline lines snaked along highways for hours during oil crises in the mid- and late-1970s. Stations ran out of gasoline and laws told consumers which days they could purchase gas. A windfall-profits tax compounded all the negative effects, and the shortages lasted until President Ronald Reagan repealed controls in 1981. The price of a gallon of gas at the pump fell by a third over five years.
Drawing on experiences of the 1970s, the FTC concluded that price controls meant “gasoline shortages could result,” leaving consumers worse off.

The history lesson for this Congress could not be clearer. Price controls could create shortages and leave our economy dangerously exposed to disruptions in supply. In the 1970s, we were the only nation on Earth to have gas lines. Why would anyone ever want to go back to that?
https://www.chicagotribune.com/2007/...ols-dont-work/

Price control works fine. You don't not need to compare gas shortage issue with price control. These are really not related. If there is shortage of something price control doesn't fix it.

The issue here is how to keep prices down so that low wage employees can live.

[Car-Addicted]

Originally Posted by Honda

Price control works fine. You don't not need to compare gas shortage issue with price control. These are really not related. If there is shortage of something price control doesn't fix it.
The issue here is how to keep prices down so that low wage employees can live.

You are missing the point. Price controls create the shortage. Read the article.

" In the 1970s, we were the only nation on Earth to have gas lines. Why would anyone ever want to go back to that?"

[ezaircon4jc]

Minimum wage jobs are ENTRY, NON-SKILLED positions. No one is supposed to live on minimum wage. I've said it before, if one is at minimum wage for more than 6 months, they're pretty much a loser. As long as one puts in the effort and does a good job, they will get a six-month bump. Fast food isn't supposed to be a career either; unless one moves into management. Your local FF jobs are supposed to be for teenagers working their first job (or maybe retired peeps just looking to keep busy), not someone raising a family. Margins in the food industry are pretty tight and most of the profit is alcohol & soft drinks. Food and paper costs are much higher than one might think.

We went to Chipotle a couple of days ago. It was $29 for a burrito, bowl and a drink. For that money, we could have gone to a sit-down place. I read an article about a guy that owns a few (I don't remember how many) Cinnabon's and Annie's Pretzels places in the Bay Area. He said he won't be expanding as he planned and will have to lay-off employees. He also said that this bill will cost him about $476K per year.

[Mosaud1998]

All I have to say

[dradernh]

When it comes to the minimum wage, the intersection with the needs of unions has always fascinated me. The piece below from seven years ago in Forbes is one of many I've read over the years. Note that it was written by a former McDonald's CEO.

"Why Do Unions Fund The Fight For $15 Minimum Wage? Because They Gain A Financial Windfall In Return"

https://www.forbes.com/sites/edrensi...h=21a1963c50ce

[Car-Addicted]

I think we have been there before.

New study says the minimum wage hike in Seattle is bad for low-wage workers
A provocative new paper by the Seattle Minimum Wage Study Team at the University of Washington suggests that this may be a deeply counterproductive policy.
second increase to $13 an hour, are unequivocal: The policy has caused serious damage to low-wage workers in Seattle. The number of hours worked by low-wage workers fell by a staggering 3.5 million per quarter. This is reflected both in thousands of job losses (or, more precisely, in jobs that would have been created but never were) and in reductions in hours worked by those who retained their jobs. These effects were so dramatic that total payroll accruing to low-wage workers fell by about $120 million per year, with workers actually losing $125 per month on average.
https://www.pbs.org/newshour/economy...w-wage-workers

[spazzyfry123]

National average income 1970: $8,730 ($68,557 in 2023 money)
National average income 2023: $59,384

National average home price 1970: $23,400 ($183,763 in 2023 money)
National average rent price 1970: $108/mo ($848 in 2023 money)
National average home price 2023: $495,100
National average rent price 2023: $1,372/mo

So accounting for inflation, average income has dropped 13%, but the average price of a home has increased 169% since 1970. Rent has jumped 62%.

Granted these numbers are pulled from different sources, and I don't know why I chose 1970, but it doesn't matter - it paints the picture that income has dropped a considerable amount and the cost to live has really gone up.

I'm sure wages need a little upward tweaking, but the cost of "_________" is just bananas right now. I honestly don't know how some folks are doing it. We're a young family with good income and future planning - I have to pull my jaw off the floor when I see the grocery bill.

But I'm with ezaircon4jc ... Minimum wage jobs should never be intended to be a career. This is for the after school high school kid or something you're doing to make ends while in college. $20/hr???

[floridaorange]

$20 x 40 hours = $800 x 4 = $3200, how much of that $3200. $38,500 a year minus taxes = $31,966

So even though you’re not meant to “live on min wage” $31,966 is hardly enough to live on in California.

That’s assuming you have no kids.

[2000cs]

Several impact already beginning in CA:

Accelerating trend toward self service (app ordering, kiosk ordering) reduces number of necessary employees. This will extend into fast food kitchens as well.

Pizza places already announcing layoffs, particularly of delivery drivers. That means a delivered pizza will come via DoorDash or similar service and will cost more. Likely a net reduction in employment. Might result in more people buying frozen pizza at the grocery store and cooking it at home; otherwise not a lot of great substitutes (that are still pizza). I hope Chuck-E-Cheese doesn’t get a boost out of this!

Rising prices for fast food will result in consumers making substitutions. Obviously this won’t drive someone to choose Burger King over McDonalds, but they will either eat at home or home-prepared (remember brown bags?) meals more or step up to full-service restaurants. I think there will be a fast food contraction, the ones that figure out how to lower costs and maintain/improve quality will do fine but the others will dwindle. My expectation is Burger King dies, at least in California (they have really declined a lot since 2020).

A mandate for higher fast food wages will result in other employees wanting higher wages, restaurants in particular. Whether they get those increases depends on available replacements and ability to raise prices; I think they will get some of it. I also think “tipping culture” will spread and get worse (consumer perspective) as a way to have the consumer pay the employees more.

If I was a fast food worker, I’d do my best to learn every task in the restaurant so I would have a chance to survive staff reductions.

Also worth noting: the non-wage impacts will be “exported” to the other 49 states and maybe internationally. What McDonalds learns in CA about operating with less labor hours will be implemented in all locations, for example. But they have no reason to raise wages elsewhere.

[dradernh]

Originally Posted by floridaorange

$20 x 40 hours = $800 x 4 = $3200, how much of that $3200. $38,500 a year minus taxes = $31,966

So even though you’re not meant to “live on min wage” $31,966 is hardly enough to live on in California.

That’s assuming you have no kids.

Note that people making $38.5K basically pay no FIT. Summarized data here: https://taxfoundation.org/data/all/f...a-2023-update/

And yes, you're not going to make it on $32K in CA, where take home pay may well be even less than that (too lazy to look up my former state's tax schedule right now ).

However, in New Hampshire, where I lived from 1997-2017, there is no state income tax, so the only taxes a worker would pay would be FICA, and property tax was buried inside, presumably, his or her rent. There's also no sales tax in NH. Tax-wise, it's a helluva state to retire to, I can tell you that!

Originally Posted by 2000cs

A mandate for higher fast food wages will result in other employees wanting higher wages...

This was the first reaction I had when I read about the new policy. The people running the state will be lucky if they haven't opened a pandora's box.

I'm certain the California Nurses Association, along with many other powerful players, are already making plans to take advantage of what seemingly began as a one-off measure. Don't believe it.

--------------------------------------------

I'm happy that fast food workers will be making more money, and more power to them. I spent my work life solving that problem, and it allowed this CA high school grad to retire at 45. I'm well aware that very few minimum wage workers have or will have the advantages I had.

However, I believe that legislating wages in this manner is certain to have consequences that have been foreseen and ignored, all for political gains among the various players. Where are the qualified leaders we need at a time when so many struggle to make ends meet, with California leading the nation in that unenviable metric?

--------------------------------------------

'Kay, I'm off the soapbox now.

[TboneS54]

Another political stunt meant to solicit future votes; nothing more.

[MassWholeBimmer]

Not going to get into the minimum wage debate per se. My gripe is raising it for certain occupational sectors. Do it for all or none.

So if my Google is correct, the general minimum wage in CA is $16.00/hr.

So I can go to a 2 year community College, become an electricians apprentice (or plumbers apprentice, or be the night shift manager at a convenience store, or fill in the blank), and make $16.00/hr, yet doing a very low skilled job of running a fri-o-lator at micky d's ( no offense to folks that run fri-o-lators) and make more...Hum...

[dradernh]

Originally Posted by spazzyfry123

National average income 1970: $8,730 ($68,557 in 2023 money)
National average income 2023: $59,384

National average home price 1970: $23,400 ($183,763 in 2023 money)
National average rent price 1970: $108/mo ($848 in 2023 money)
National average home price 2023: $495,100
National average rent price 2023: $1,372/mo

So accounting for inflation, average income has dropped 13%, but the average price of a home has increased 169% since 1970. Rent has jumped 62%.

Granted these numbers are pulled from different sources, and I don't know why I chose 1970, but it doesn't matter - it paints the picture that income has dropped a considerable amount and the cost to live has really gone up.

As somone who lived and worked in San Francisco, California in 1970, I'd suggest it's an excellent starting point. The reason for that is it was early days in a decade of remarkable inflation. At the beginning of the decade, home prices hadn't begun the meteoric rise in California property values that continues to this day, and a working stiff could still support a family and own a home in the City. That reality soon ended.

The 1970s was the decade this country began to choose to live beyond its means in a significant way, and we've been doing so ever since. See:

https://www.thebalancemoney.com/us-d...y-year-3306306

We've generally been successful because we have the world's reserve currency (read: foreigners will buy the bonds that finance our annual deficits) and because we're still rich enough to make the interest payments on our current $34.6 trillion of national debt. However, the day of reckoning is approaching, and to continue to make the numbers work, Americans who are younger today will find it necessary to pull the plug on the party. I'm glad I won't be here to see how that plays out.

Since the subject is minimum wage workers, it's worth noting that the difference in the financial lives of much of the bottom 50% and the lives of those in the top 20% are so different that it's a wonder we don't have more social unrest. I've assumed it's because the American Dream is still alive and well and that it continues to inspire our citizens as it draws-in millions of people from around the world, both legally and illegally. That dream must be kept alive or the day when we won't recognize our country may be closer than we imagine.

Originally Posted by TboneS54

Another political stunt meant to solicit future votes; nothing more.

There's no real need at this time, as CA is fully and completely a one-party state. Running with your thought, though, it's certainly yet another form of virtue signaling.

[spazzyfry123]

Originally Posted by floridaorange

$20 x 40 hours = $800 x 4 = $3200, how much of that $3200. $38,500 a year minus taxes = $31,966

So even though you’re not meant to “live on min wage” $31,966 is hardly enough to live on in California.

That’s assuming you have no kids.

Assuming you get a full 40 hour work week with a minimum wage job to begin with (I doubt you will; I think <30 hours = part time / >30 hours = full time in CA), you'll see $41,600/yr and bring home $35,721 of that between federal and state taxes assuming there are no lower-income tax subsidies.

Part time employees are not obligated to offer benefits such as health insurance under ACA as an example. Overtime (1.5x pay) doesn't kick in until 40+ hours. Etc. Employers would be mad to offer 40 hour work weeks to minimum wage employees at this rate. Imagine paying now $30/hr for an entry level fast food worker in plus hours and covering xx% of a medical plan on top.

My guess is you'll be floating an average of high 20s of hours a week and see closer to mid-to-high $20k take home after a full year of work. Your only option is to have two or three jobs to achieve enough hours to be "full time", but not qualifying for any of the benefits of being full time.

So we're landing at someone, in California (that also has a 7.5% base sales tax), is realistically going to be trying to "live" with $25k in their pocket after a year's work.

What is the benefit in doing this? The only output I see is the cost of "_____" will rise substantially for everyone with no meaningful impact to those on the recipient side of $20/hr.

[clutchdj]

Smoke in mirrors. Unions and politicians. They are in bed with each other, and will soon, if not already govern every major city. They do not care about employees and their wages. That is on the surface with all of the emotion. They care about political advancement and the unions with their dues. The dollar just shrinks in the long run, for everyone.