A new California law championed by Gov. Gavin Newsom (D) boosted the hourly wage for fast food workers from $16 to $20 an hour. The law took effect on April 1, 2024. It didn’t take long for fast-food restaurants across the state to feel the impact on their bottom line. Many have been forced to lay off employees, cut hours, and increase prices to offset the state’s new wage requirement.
The Cheng family operates seven Wendy’s restaurants in Southern California. To offset the mandatory wage increase, they’ve had to reduce their workforce nearly by half, cut hours for remaining staff, and increase prices by 8 percent to stay in business.
Wendy’s is not the only chain to suffer from the new mandate. Rubio’s California Grill has reportedly shut down dozens of locations across the state. Jersey Mike’s has had to cut part-time staffers. Other chain restaurants, including McDonald’s and In-N-Out, have been forced to raise menu prices. The iconic Arby’s in Hollywood had to shutter its doors after 55 years. They could not overcome the increased food costs, inflation, and the new minimum wage law. Instead of earning $20 an hour, many fast-food employees in California are now making $0 and must find new jobs in an already difficult market—the opposite result of the new law’s intended outcome.
Jot Condie, president and CEO of the California Restaurant Association, told the Associated Press, “When labor costs jump more than 25 percent overnight, any restaurant business with already-thin margins will be forced to reduce expenses elsewhere.”
California restaurant staffers are not the first to witness the negative impact of a higher minimum wage. In a popular PragerU video entitled “Minimum Wage Cost Me My Job,” presenter Simone Barron recounts how she quickly regretted supporting a higher minimum wage. Barron considered herself a “fair-minded progressive” who cheered on the Seattle City Council when they raised the minimum wage from $9.47 to $15 an hour back in 2015. As a consequence, the restaurant where she worked closed for good. Barron was quickly able to score an interview at another restaurant, but then that restaurant closed before she could even take the interview.
Years ago, New York City’s higher minimum wage pushed the industry into a recession as 75 percent of owners reduced employee hours and 47 percent eliminated jobs. Years later, Sacramento, unfortunately, did not learn from New York’s mistakes.
While many “fair-minded progressives” like Simone Barron may think a higher minimum wage is an overall good for workers and society, the reality is starkly different. Its detrimental effects often outweigh any potential benefit.
You would think it’s common sense: when business expenses rise, like paying higher wages, companies must cover these costs, often by increasing prices for consumers. These are basic economic principles that every young American should learn in high school. Unfortunately, that’s not the case. America’s education system is falling short, prioritizing DEI (Diversity, Equity, and Inclusion) initiatives, radical gender ideology, doomsday climate narratives, revisionist history, and anti-Americanism over practical life skills, financial literacy, and foundational subjects like history, math, and civics.
As a result, many Americans lack a basic understanding of economics. It is one of the most important but misunderstood subjects in our world today. PragerU understands that our education system is failing to educate Americans and is committed to doing the job that our schools and universities have neglected to do. That’s why they launched PragerU’s Economics 101—free videos and educational resources that teach basic economic principles to Americans who are in desperate need of a quality education. It is designed for people who want to learn the ins and outs of economics without reading a 1,000-page textbook or sorting through an endless sea of false information online.
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The Econ 101 videos focus on an array of topics including capitalism, socialism, the free market, minimum wage, inflation, and taxes. Presenters include David Bahnsen, one of the top financial advisors in America according to Barron’s, Forbes, and the Financial Times; Steve Forbes, chairman and editor-in-chief of Forbes Media, a best-selling author and a two-time presidential candidate for the nomination of the Republican Party; and Stephen Moore, an economist and former fellow at the Cato Institute who has worked with FreedomWorks, the Wall Street Journal, The Washington Times, National Review, the Heritage Foundation, and CNN, to name just a few.
If we can’t trust the media, the government, or academia to keep our citizens informed and educated about economics, then it’s up to us to seek out alternatives that teach the truth. PragerU has brought together some of the brightest economists and financial minds to teach the fundamentals of economics and financial decision-making.
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