We have previously discussed California legislative efforts to increase the minimum wage for fast-food workers. Note blogs posted May 3, 2023 and October 18, 2023. Now the Los Angeles City Council has voted to mandate minimum wage increases for workers in hotels, with more than 60 rooms, to $30.00 per hour by 2028. Not to be left out, the New York City Council proposes to require that grocery delivery workers receive a minimum wage of $21.44 per hour to match the increase food delivery workers received in April.
Unfortunately, there is no free lunch, fast or otherwise. A new research report has confirmed that California’s experiment in large increases in minimum wages resulted in reduced employment. The authors, three economists, who published their paper in the National Bureau of Economic Research, conclude that California lost 18,000 fast-food jobs during the year after the quick-serve restaurant chains were forced to increase wages.
The idea that forced wage increases result in reduced employment is not new, but politicians seem to be unable to accept reality. Investors are not similarly constrained.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA
