California’s mandate to pay workers at fast-food chains a minimum wage of $20 an hour went into effect Monday despite concerns that it could worsen the state’s unemployment and inflation problems.
The new rules will increase the minimum wage for workers at large chain restaurants by 25% and create a Fast Food Council with the power to implement further increases of up to 3.5% annually over the next five years.
While some workers will get raises, others will lose their jobs due to automation or downsizing. Minimum wage increases tend to displace jobs from the most vulnerable and lowest-skilled workers, whose jobs do not generate enough income to support high wage levels.
“Some restaurant chains have responded by laying off employees. Faced with an increase in the number of delivery workers, Pizza Hut franchises in December prioritized the use of apps such as Uber Eats and DoorDash and laid off delivery workers. announced that he has been fired,” UPI reported.
California already had the highest unemployment rate in the nation at 5.3% in February.
Some restaurants have announced that they will raise prices in response to the minimum wage increase. This could further increase the state’s inflation rate. The consumer price index for services excluding housing rose 6.6% in the San Francisco area, far exceeding the national rate of increase of 3.9%.
Raising the minimum wage could also attract illegal immigration. Research shows that the promise of higher wages attracts immigrants. Furthermore, employers who want to avoid mandated raises are more likely to hire undocumented immigrants because they are less likely to complain to government officials about low wages.
