California is now leading the nation in implementing controversial wage laws. The state recently increased the hourly minimum wage for fast food workers to $20. Governor Gavin Newsom stated, “We saw the inequities…We had a responsibility to do more.” Unions advocated for the wage increase, and in states controlled by Democrats, unions often have significant influence.
CNN reported, “Half a million California fast food workers will now earn $20 per hour.” The Center for American Progress claimed that raising the minimum wage would lift millions of families out of poverty and boost the economy.
However, the question arises – if raising the minimum wage is a win-win situation, why stop at $20? Why not $30 or even $100? The reality is that government-mandated wage increases do not always result in positive outcomes.
Interfering with market prices can lead to unintended consequences. French economist Frederic Bastiat highlighted the seen and unseen effects of government intervention in economic decisions. While the immediate impact may seem beneficial, the long-term consequences can be detrimental.
Unfortunately, the consequences of the $20 minimum wage in California are already evident. Thousands of Californians have lost their jobs as restaurants closed or reduced their workforce. Some employees experienced cuts in their hours, leading to financial hardships.
Additionally, the shift towards automation has accelerated, with companies like Chipotle introducing robots to replace human workers. This trend could result in further job losses for fast food employees.
Furthermore, the rise in minimum wage can lead to increased prices for consumers. Despite Governor Newsom’s claims that prices would not be affected, reports indicate that businesses have raised prices on products like coffee and burritos.
One of the most significant downsides of minimum wage laws is the impact on young and inexperienced individuals seeking employment. Higher wages may deter employers from hiring inexperienced workers, depriving them of valuable opportunities to gain work experience.
It is essential to consider the unseen consequences of government-mandated wage increases and their impact on vulnerable populations. While the intention may be to assist low-income individuals, the reality can be quite different.
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