California’s $20 fast food worker minimum wage a regressive tax

California’s new $20-an-hour minimum wage at fast-food restaurants has turned into a regressive tax on the state’s low-income residents. People who want their cheeseburger or fried chicken fix will have to pay more for their money to get them.

Menu prices rose 10 percent at California restaurants subject to the state’s minimum wage rule, which targeted restaurant chains like McDonald’s and Popeye’s and took effect April 1. This far exceeds the rise in fast food prices nationally, according to The Wall Street Journal. (The restaurant industry prefers the term “quick service” rather than fast food but I’ll stick with the more common phrase.)

Americans across All income groups Eat fast food, but the primary consumers are low-income families according to Morning consultation. Any increase in prices will hit them hard and limit their meal options.

California Governor Gavin Newsom and other supporters of the regulation Justify it On the basis that fast food restaurants are able to pay their workers higher wages and that companies will simply absorb the higher costs. But like anyone taking Economics 101 Knownthe inevitability of higher costs will be passed on to consumers because, well, they are the ones paying.

Newsom and his allies on the issue argue it’s worth it anyway because it helps workers. “These wages will go toward basic necessities like rent and groceries,” a Newsom spokesperson told the newspaper. Newsom’s position was so unprincipled that he was above granting exceptions Business run by his friends.

Yes, parent companies like McDonald’s and Wendy’s may be wealthy, but franchisees are usually small, independent companies that operate solely Renting the company’s brand. These franchisees pay for the benefit of the company’s advertising, business methods and customer loyalty but they operate on their own. Most restaurants operate individually Small profit margins They are the ones who hire the workers. A higher minimum wage means higher labor costs in these restaurants. Most of them have no choice but to increase what they charge customers.

There is little evidence that workers benefit from this increase. Restaurants shed jobs as they turn over Towards automation and turning to app-based delivery services to offset the high cost of doing business in the Golden State. The Wall Street Journal Reported in March Pizza delivery restaurants in the Golden State alone have cut nearly 13,000 jobs, choosing instead to use third-party, app-based delivery services.

There is abundant evidence of the relationship between a high minimum wage and unemployment in California. The Golden State’s minimum wage laws have long exceeded the federal government’s minimum requirements, and the $20 rate for fast food restaurants is easily within reach the above In the nation. California has also consistently led the nation in high unemployment rates, averaging 1.5 points above the national average last time Two decades. Business owners are sure to rely more On automation And other solutions to compensate for the recent increase in labor costs.

So, workers lose their jobs, managers see lower profits, and customers are forced to pay more for their food. Talk about an unhappy meal.

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