For every action, there is an equal and opposite reaction. Isaac Newton posited this as his third law of motion, but it applies to economics, as well, and the state of California is learning this to its sorrow. At least, California's fast-food workers are learning this, as California's minimum-wage laws are killing their jobs. As far as California's impeccably coiffed Governor Gavin Newsom is concerned, there's little evidence that he's capable of learning.
Whether Governor Newsom admits it or not, reality is a harsh mistress; California's minimum-wage law has cost 18,000 jobs in the fast food industry.
The Bureau of Labor Statistics (BLS) tracks detailed employment data including employment at “Limited-Service Restaurants and Other Eating Places”. This category tracks national and state level employment at restaurants that serve food at a counter. While it includes counter service restaurants not impacted by the minimum wage hike, this data provides a good proxy for those restaurants that were impacted.
The chart below compares the growth in California’s employment at these establishments to the nation overall. The first two bars compare the average annual growth between January 2015 and August 2023 – right before the $20 minimum wage for fast food workers in California became effective. During these 8 years, the average annual growth rate in fast-food jobs was faster in California (+3.0 percent) than the national average (+2.1 percent). Also important, while not pictured, the monthly growth patterns were similar.
Then things changed in September 2023. After the $20 minimum wage was implemented, employment opportunities declined in California (-2.3 percent) even though they grew nationally (+1.3 percent), the second set of bars.
Here's the chart:
T'was ever thus. Raise the cost of any commodity or service, and you'll depress demand for that commodity or service. Governor Newsom and the progressives in Sacramento clearly don't understand this, or if they do, they aren't letting economic reality get in the way of the narrative. But it's as certain a thing as the sunrise; more burger-bots, more automated ordering kiosks, more franchises shutting down, fewer places to grab a cheap burger and some fries, and fewer jobs for people who are trying to get their feet on the first few rungs of the economic ladder.
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To Governor Newsom, I can only say this: Please learn some basic economics. I recommend Dr. Thomas Sowell's Basic Economics, or even Adam Smith's The Wealth of Nations, but seriously, Governor Newsom, any reading of basic economics would be worth your while, as your current level of understanding is evidently zero. Any knowledge is better than none; one might even say, a little dab'll do ya.
Economics is fun that way. Newton was talking about physics in his three laws of motion, but they also apply to economics as well. Even as an economy moves, it reacts. The reaction to California's minimum wage laws was a loss of jobs, due to increases in automation or outlets just shutting down and leaving. Anyone with the most elementary grasp of economics would have seen it coming miles away.
Editor’s Note: Thanks to President Trump’s leadership and bold policies, America’s economy is back on track.
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