Ahead of a ballot measure to add $2 to the hourly minimum wage, studies show fast food jobs increased after the state bumped hourly pay to $20 in that sector.
By Mark Kreidler, Capital & Main
This story is produced by the award-winning journalism nonprofit Capital & Main and co-published here with permission.
California’s dominant corporate fast food chains and their scare partners were sure about one thing: The state’s new $20 per hour minimum wage for most workers in that sector was going to lead to massive job cuts, dramatic price hikes or both.
It hasn’t happened. According to data from the federal Bureau of Labor Statistics, the fast food industry in California has added nearly 12,000 jobs since March, which was the last month before the $20 wage kicked in. The total, as of August’s preliminary count, was 746,700 jobs. (August is the most recent month for which data is available.)
Two separate studies found, respectively, that the policy increased average worker pay by 18%, yet had no effects on hours, scheduling or benefits. One of the studies noted that the new wage policy has led to only a small increase in fast food prices — 3.7%, or about 15 cents on a $4 burger.
Statistics can be made to dance, and there are unquestionably individual storefronts and franchisees that have struggled or cut jobs. Further, fast food employment numbers are likely to drop in the final quarter of the year, as they do every year, because more people are with family during holidays and are grabbing fewer quick meals.
But this is all something to ponder while considering Proposition 32, on the state ballot in November. That measure would raise the minimum wage across all job sectors in California to $17 immediately and $18 beginning Jan. 1, a bump from the $16 current figure.
Once again, business interests, including the powerful California Chamber of Commerce, are warning of “a reduction of jobs and working hours for California employees” if the initiative passes.
The data to back up that argument? We’re still waiting for it.
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In the bigger picture, $18 an hour isn’t drastic. It won’t come close, for example, to the $27.32 an hour that a single adult needs to earn in order to afford basic living costs in California, according to MIT’s Living Wage Calculator.
A raise in the statewide minimum also isn’t the final word. At least 40 cities or counties already mandate wages that are higher than the current $16 state minimum, including the city of Los Angeles at $17.28 and San Francisco at $18.67. And in addition to the fast food wage law, hundreds of thousands of lower-wage health care workers received raises this month, some of them on their way to an eventual $25 an hour.
But the state minimum sets the floor, and it’s an important tool. According to the nonpartisan Legislative Analyst’s Office, for example, in five of the most expensive California counties in which to live (Marin, Monterey, Orange, Santa Barbara and Santa Cruz), there is only one city with a local wage ordinance, Novato, at $16.86 per hour.
That is the heart of the matter. If you’re living in Orange County and making the state-mandated minimum of $16 an hour, you are losing the game before it begins. The MIT calculator estimates that you need to make more than $30 an hour as a single adult to afford basic living expenses there.
A higher state minimum won’t solve California’s housing crush, and housing costs are inseparable from the cost of living. But even a small rise in the minimum is significant in the lives of those already scraping to get by.
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This would all matter less in a state without California’s dynamics, both the sheer number of people affected by a small wage raise and some of the important jobs they perform. About one third of California workers — 5.6 million in all — are defined as low-wage earners by the UC Berkeley Labor Center. And the leading occupation of low-wage earners isn’t fast food worker, but rather home health care and personal care provider.
Economists also note that when California residents can’t afford basics like sufficient groceries or doctor’s visits, they turn to social safety-net programs that, while critical, are generally funded with tax dollars. There’s a better solution: gradually raising pay to levels that approach a living wage.
Prop. 32 requires employers with at least 26 employees to start paying $17 an hour immediately, and $18 beginning Jan. 1. Employers with fewer than 26 employees would begin paying $17 an hour on Jan. 1, not moving to $18 until 2026. Inflation adjustments would begin in 2027.
That does not sit well with some business interests. “If Proposition 32 is passed, Californians will see higher costs, fewer jobs and a reduction of available work hours for employees in the state,” said Jennifer Barrera, president and CEO of the California Chamber of Commerce. CalChamber asserted that the measure will drain resources available “to fund important programs,” including public safety, education and housing.
There’s scant evidence for any of that. The Legislative Analyst’s Office estimates that if Prop. 32 passes, resulting price hikes by businesses will amount to less than half a percent. The number of jobs, meanwhile, “could go up or down,” but the change either way would amount to less than a quarter of a percent.
What would change? The amount of breathing room each month for low-wage workers in the state.
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Prop. 32 is largely funded by Los Angeles entrepreneur and anti-poverty activist Joe Sanberg, who for years has advocated for higher minimum-pay levels. Considering the skyrocketing cost of living in California, especially in and near the state’s urban centers, this modest wage bump doesn’t seem unreasonable.
That assures nothing about the vote, though. Recent statewide polling data shows the initiative at nearly a 50/50 split among likely voters, and one poll found that nearly 20% of voters were undecided.
It’s possible that those voters hear voices like the CalChamber’s, warning of dire consequences and runaway price hikes. Those same arguments were being made nearly a decade ago when California began raising its state minimum wage, just as they were when the fast food law was about to go into effect. They may not have data, but they certainly have volume.
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