Gavin Newsom keeps denying evidence that his minimum-wage policy hurts workers.
California’s political class really is living in La La Land when it comes to economics. Gov. Gavin Newsom keeps denying that the state’s new $20 an hour fast-food minimum wage is harming workers. Now unions are trying to raise the minimum even more.
Mr. Newsom has accused us of “blatantly lying” by highlighting last weekend how fast-food restaurants in his state have been cutting jobs and reducing hours since the $20 minimum took effect in April. “Month after month, fast food jobs have INCREASED since we raised the minimum wage to $20/hour for the industry,” he wrote on X.com.
The Governor cited a news story in the Orange County Register that reported an uptick in jobs at Southern California limited service restaurants—many but not all of which are fast-food chains covered by the law—since March. But as we previously noted, this data isn’t adjusted for seasonal effects, and restaurants typically hire more workers in the spring and summer.
After accounting for seasonal effects, California’s limited-service restaurants have shed 3,333 jobs since March and 6,320 since January, according to data from the Federal Reserve Bank of St. Louis. Limited-service restaurants in Nevada have added 1,757 jobs since March. Credit to the Employment Policies Institute for digging up the seasonal data.
Mr. Newsom tweeted that “What’s good for workers is good for California!” Certainly. But California’s $20 minimum is bad for workers and the state. It is especially harmful to teens who may be priced out of jobs and miss valuable work experience. It also disproportionately harms Hispanics who make up 60% of the state’s fast-food workers.
Its negative effects are magnified by the state’s mandate that salaried employees receive overtime if they make less than double the hourly minimum in their field. That means fast-food managers who earn $83,200 or less must be paid time and a half if they work more than eight hours a day, as many do. This will likely result in more job cuts and higher prices.
But the unions that pushed for the $20 minimum shut their eyes to the damage. The Service Employees International Union (SEIU) is pressing the state’s new fast-food council—stacked with labor representatives—to raise the minimum 3.5% to $20.70 at a meeting next week. The council has the power to raise the minimum as much as 3.5% every year.
The SEIU wants to force other employers to raise wages to compete for workers. But fast-food layoffs will reduce competition for workers. Policies that originate in the Golden State have a habit of spreading nationwide. Maybe someone should ask Vice President Kamala Harris if she thinks California’s $20 fast-food minimum wage is a good idea.