More than 1,200 California delivery drivers will soon find themselves without a job after Pizza Hut announced mass layoffs in response to California’s upcoming $20 minimum wage law for fast-food workers.
Other businesses are no doubt looking to do the same, while also having to significantly raise their prices in response to the law.
It brings to mind an honest remark from former Gov. Jerry Brown back in 2016 when he backed a $15 minimum wage proposal: “Economically, minimum wages may not make sense. But morally, socially and politically they make every sense because it binds the community together to make sure parents can take care of their kids.”
Jerry had it right in the first sentence, and slipped the truth in the second that raising the minimum wage makes political sense for politicians.
After all, it gives politicians a nice press release in which it appears they are doing something for working people.
But all policies come with trade-offs and all economic actions happen in a much broader economic ecosystem which adjusts to sudden changes.
Higher government-mandated minimum wages come with a cost.
Who do you think ultimately pays the cost of government edicts?
It’s not the corporate CEO passing up on a yacht or six-figure vacations so that some workers can make an extra few dollars per hour. It comes from you, the consumer. Businesses pass on as much of the higher cost as they possibly can.
For years, California businesses have responded to increased state mandates with increasingly pervasive “service fees.”
Many low-skilled workers find it harder and harder to get that first job. And all workers, but especially those lower on the economic ladder, are forced to deal with the consequences of higher prices for seemingly everything.
Gov. Gavin Newsom and Assemblyman Chris Holden of Pasadena no doubt told themselves they were doing the right thing for workers when they pushed for higher wages in the fast-food sector.
But the reality is apparent to anyone with eyes and a functioning brain. Politicians can’t create prosperity, they can only poach from and destroy it.
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