Readit News logoReadit News
Animats · 4 months ago
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

socalgal2 · 4 months ago
Why did it only affect California and not other states?
com2kid · 4 months ago
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.
vineyardmike · 4 months ago
…the California minimum wage?
ajross · 4 months ago
I don't see that it did? The linked article is specific to CA data, it's not a broad survey.
exe34 · 4 months ago
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.

Dead Comment

Dead Comment

vondur · 4 months ago
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.
unsnap_biceps · 4 months ago
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.
lotsofpulp · 4 months ago
Never having to deal with a member of the public inside your property is a huge liability and hence stress reducer.
estearum · 4 months ago
> 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)?

msgodel · 4 months ago
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.

fullstick · 4 months ago
How do you know there are "literally zero homeless folks" in your area?
bko · 4 months ago
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.

zukzuk · 4 months ago
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.
benreesman · 4 months ago
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.

bruhlikereally · 4 months ago
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.
UltraSane · 4 months ago
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.
unethical_ban · 4 months ago
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.
marcosdumay · 4 months ago
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.
CPLX · 4 months ago
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.

Deleted Comment

bawolff · 4 months ago
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.

standardUser · 4 months ago
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.
morkalork · 4 months ago
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.
lovich · 4 months ago
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

DarkNova6 · 4 months ago
I fail to see the causality how this is caused by minimum wages.
joshuamoyers · 4 months ago
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.
socalgal2 · 4 months ago
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
motorest · 4 months ago
> 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.

V__ · 4 months ago
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.
omoikane · 4 months ago
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.
Workaccount2 · 4 months ago
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.
bamboozled · 4 months ago
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.

Deleted Comment

croes · 4 months ago
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.

trod1234 · 4 months ago
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).
01HNNWZ0MV43FF · 4 months ago
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.

Squeeeez · 4 months ago
Where do people eat then? Coming from someone completely foreign to such a culture.
senkora · 4 months ago
There’s almost always still a parking lot because of zoning laws, so you can eat in your car while parked.
2OEH8eoCRo0 · 4 months ago
At home in front of the television while scrolling their phone
PopAlongKid · 4 months ago
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.
UltraSane · 4 months ago
" ongoing issues with the local homeless population"

This is the REAL issue.

dangus · 4 months ago
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.

Dead Comment

frikskit · 4 months ago
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?
anonymousiam · 4 months ago
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.

benbayard · 4 months ago
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.

Uvix · 4 months ago
> 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.

runako · 4 months ago
> 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.

littlestymaar · 4 months ago
> 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…).

simoncion · 4 months ago
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.

nxobject · 4 months ago
Was your normal breakfast spot subject to AB 1228 regulations?

Dead Comment

DarkNova6 · 4 months ago
This only makes sense if staffing is a major cost factor, which it isn't.
gopher_space · 4 months ago
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.

sokoloff · 4 months ago
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.

MLR · 4 months ago
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.

alphazard · 4 months ago
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.

barchar · 4 months ago
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.

sroussey · 4 months ago
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.

po1nt · 4 months ago
It's 100% lower wages for those who lost jobs.
StevenWaterman · 4 months ago
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.

simianwords · 4 months ago
Also consider non linear utility of money.

Deleted Comment

bravesoul2 · 4 months ago
They are working the same hours elsewhere for free?
frikskit · 4 months ago
Why not set very low maximum wage ceilings and have 100% employment? /s
BriggyDwiggs42 · 4 months ago
Correct?
ath3nd · 4 months ago
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.

hyperman1 · 4 months ago
One possible reason: People don't need a second job anymore.
timmg · 4 months ago
> 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.

Aloisius · 4 months ago
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.

ugh123 · 4 months ago
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.
kesor · 4 months ago
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?
fortran77 · 4 months ago
That was the original intent of minimum wages!

https://mises.org/mises-wire/racist-history-minimum-wage-law...

dehrmann · 4 months ago
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.
coldtea · 4 months ago
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...
refurb · 4 months ago
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++
slibhb · 4 months ago
Maybe a good trade if it was just a loss of employment. But there are other downsides...like fewer hours and higher prices.
forrestthewoods · 4 months ago
> overall sounds like a big success?

It depends on how many hours were worked. Which the paper did not measure.

sethammons · 4 months ago
Squid Games, in a nutshell.

Dead Comment

JKCalhoun · 4 months ago
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.
nomilk · 4 months ago
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.

twobitshifter · 4 months ago
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.
jeroenhd · 4 months ago
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.

milesrout · 4 months ago
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.

throwaway4496 · 4 months ago
> 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.

nomilk · 4 months ago
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.
gibsonf1 · 4 months ago
The 18,000 people who lost their jobs may disagree.
toomuchtodo · 4 months ago
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-...

ath3nd · 4 months ago
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.
astrobe_ · 4 months ago
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.

chii · 4 months ago
> 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).

nxobject · 4 months ago
> 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?

khalic · 4 months ago
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
snapplebobapple · 4 months ago
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
Workaccount2 · 4 months ago
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.

SpicyLemonZest · 4 months ago
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”.
stefan_ · 4 months ago
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.
thrance · 4 months ago
That's what you get after decades of relentless propaganda. Anything remotely socialist is completely taboo there.
slibhb · 4 months ago
"Decades of relentless propaganda" also known as the "the 20th century"
roenxi · 4 months ago
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.

ath3nd · 4 months ago
> 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.

mc32 · 4 months ago
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.

JustExAWS · 4 months ago
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?
unnamed76ri · 4 months ago
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.

relaxing · 4 months ago
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.

georgeburdell · 4 months ago
It's been a generation since minimum age workers were mostly high school kids.
skippyboxedhero · 4 months ago
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).

delusional · 4 months ago
> 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.

Glyptodon · 4 months ago
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.

qudat · 4 months ago
> 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.

jeroenhd · 4 months ago
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.

gruez · 4 months ago
>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.

Glyptodon · 4 months ago
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.
Philorandroid · 4 months ago
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.

tossandthrow · 4 months ago
> 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.

Glyptodon · 4 months ago
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.

dartharva · 4 months ago
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.

Aloisius · 4 months ago
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-...

miley_cyrus · 4 months ago
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...

waffleiron · 4 months ago
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

Ey7NFZ3P0nzAe · 4 months ago
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?
Spivak · 4 months ago
You have made a good case for a close reading of the study. Are they wrong? Is the methodology bad?
jandrewrogers · 4 months ago
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.

cavisne · 4 months ago
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.
hedora · 4 months ago
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.