Did California's fast food minimum wage reduce employment?

Original Article ↗ Hacker News Discussion ↗

Effects on Fast-Food Employment

  • NBER paper: finds ~2.7–3.9% relative decline in California fast‑food employment vs “elsewhere in the US,” roughly 18–20k jobs.
  • Several commenters note this is small compared to the sector and may be overshadowed by COVID, delivery shift, and broader restaurant decline.
  • Others argue that even a few percent is “massive” given only part of the sector was directly affected and that the effect likely grows over a decade.

Tradeoffs: Higher Wages vs Fewer Jobs

  • Many frame it as a trade: modest job loss for roughly 20–25% higher wages at the bottom.
  • Supporters call that an overall success, especially if total wages paid rose and if displaced workers quickly found other jobs; skeptics stress those workers experience a 100% wage loss.
  • Utility arguments appear: a 25% raise for low‑income workers may bring more benefit than the loss borne by a smaller displaced group—unless that group is permanently sidelined.

Who Loses Jobs? Youth, Low‑Productivity, Disabled

  • Several argue high minimum wages mainly exclude:
    • Teens and first‑time workers (removing “stepping stone” jobs),
    • Older low‑skill workers,
    • People with disabilities or very low measured productivity.
  • Counterpoint: these groups can be supported via wage subsidies, EITC, or targeted programs rather than keeping wages low for everyone.

“Living Wage” vs Business Viability

  • One camp: if a business can’t pay a living wage, it shouldn’t exist; low wages are framed as exploitation and de facto corporate welfare (with taxpayers subsidizing workers via benefits).
  • Opposing camp: “living wage” is vague, differs by household, and minimum wage is not designed for that; forcing high floors kills marginal but socially useful businesses and self‑employment.

Automation, Hours, and Service Quality

  • Observations of:
    • Fewer staff, reduced hours, higher prices, more kiosks and app‑only or drive‑through‑only formats.
  • Some see this as accelerated automation that would have come anyway; others view it as policy‑induced substitution of machines for marginal human jobs, plus degraded service.

Broader Economic & Sector Spillovers

  • Unclear from the thread whether total employment in California fell: some data cited show overall job and fast‑food job counts still rising statewide.
  • Discussion of spillovers: higher low‑end wages could lift demand in other sectors, or simply bid up rents and benefit landlords in a constrained housing market.
  • Housing scarcity and property‑tax structures (e.g., Prop 13) are repeatedly blamed for making any wage inadequate.

Methodology, Data, and Conflicting Studies

  • Berkeley study (using chain‑specific data) is cited as finding stable fast‑food employment, higher wages (~18%), and modest price increases (3–7%).
  • Critics question Berkeley’s union funding; others point out NBER’s corporate funders. Both are seen as potentially biased.
  • There is disagreement about using broad BLS categories vs narrowly defining covered firms and about appropriate control regions (“elsewhere in US” vs adjacent areas, à la Card & Krueger).

International & Comparative Notes

  • Commenters point to Europe and Ontario: higher fast‑food wages, strong unions, and no tipping culture coexist with affordable food—but often slower growth and very high housing costs.
  • Nordic countries often rely on sectoral bargaining rather than statutory minimums, plus strong social safety nets.

Normative and Philosophical Fault Lines

  • Deep split between:
    • Market‑first views: wages = productivity; price floors inevitably price out some workers.
    • Justice‑first views: certain job/wage combinations are morally unacceptable, even if markets “clear.”
  • Alternatives floated include stronger unions, higher EITC, UBI, wage subsidies for disabled workers, and aggressive housing supply reform. No consensus emerges.