When California passed AB 1228 last September, raising the minimum wage for fast-food workers from $15.50 to $20 per hour — the highest in the nation — the industry responded with a familiar litany of threats. If fast-food corporations and their franchisees were forced to pay workers closer to a livable wage, they would have to raise prices, lay people off, and replace workers with robots en masse to make up the difference.
Now that the wage floor has been in effect since April, those threats appear hollow.
According to a working paper by Michael Reich and Denis Sosinskiy of the Institute for Research on Labor and Employment at the University of California, Berkeley, raising the minimum wage for fast-food workers to $20 led to an average pay increase of 18 percent per worker but did not reduce fast-food employment. Prices did go up, with some variation between chains and menu items, but the average increase of around 3.7 percent (“about 15 cents on a $4 hamburger,” as the Reich and Sosinskiy put it) was marginal. The researchers estimate consumers absorbed almost two-thirds of the increased costs.
Reich and Sosinskiy’s study should take some of the wind out of the fast-food industry’s argument of choice whenever any jurisdiction anywhere proposes a minimum wage increase. Virtually whenever legislators make a serious proposal, industry backers — like the auxiliaries for any low-wage industry in the United States — consistently invoke the threat of lost jobs, concealing their own distaste for paying people more behind concern for the working class.
The industry response to the California increase was no exception. “Every day you see headlines of restaurant closures, employee job losses and hours cut, and rising food prices for…
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Auteur: Alex Park
