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California’s $20 Minimum Wage Will Gut Jobs AND Make Fast Food Unaffordable.

Fast-food lovers in California should prepare for sticker shock, as companies say the state’s new minimum wage increase will lead to more expensive Big Macs and burritos.

Back up: The state recently passed laws to increase the minimum wage to $20 an hour for fast-food workers – up from the previous $16 hourly rate. This goes into effect in April.

The effect: Fast food chains like McDonald’s, Chipotle, and In-N-Out warn that franchisees will be forced to increase prices to cover the added labor costs.

McDonald’s says franchisees could see costs surge by $250,000 per store annually.
Chipotle says Californians can expect as much as a 9 percent rise in menu prices.
Jack in the Box anticipates up to an 8 percent rise in prices.

Zoom out: California is home to over 761,900 fast-food workers. This jump would give the state the highest minimum wage, surpassing Washington D.C.’s $16.5 hourly rate.

Big picture: A 2021 study by the nonpartisan Congressional Budget Office found that a $15 national minimum wage would lead to a loss of 1.4 million jobs.

My take: Minimum wage jobs are meant to be starter jobs for teens and young adults. If adults are working at fast food restaurants, I do not fault them for desiring a ‘livable wage.’ However, mandating unreasonable wages is not the solution. If the government wants to step in, it should focus its energy on providing training and opportunities to get those adults into jobs where the market dictates a livable wage.

This article is adapted from the free ‘Wake Up Right’ newsletter, which you can subscribe to here.

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