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Krispy Kreme and McDonalds
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So what happens to the skilled workers who were making $20/hr? They are going to demand $30/hr (they aren't going to accept minimum wage)….then the managers making $30/hr (or around $60K) are going to demand more….and so on. It's California's own fault it's so expensive to live there. Taxes, taxes, and more taxes. This massive increase in minimum wage is going cause problems. BIG problems down the road.
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Yep, get ready for mass layoffs. Companies will simply reduce their workforce. McDonalds will automate their whole store. If a company can afford to pay 3 workers $10/hour, when the rate goes to $15/hour, one job will be eliminated. I have a lot of experience managing P&Ls. The first thing to go to save money is always people. Hooray for Welchian Capitalism!
You have to look at the recent increases to understand. Just 4 years ago, the CA minimum wage was $13. The following year it bumped up to $14. In 2022 it rose to $15, then last year to $16, and now $20.
And it's not just a one-off pay raise. A fast food council will be able to increase the minimum wage by up to 3.5% a year, depending on inflation.
"Diners have already faced dramatic price increases during the pandemic. Restaurants typically raise prices by around 2% a year, but some put prices up by more than 10% in 2022 amid soaring labor and commodity inflation."
This has very much impacted profit margins. For multiple franchise owners, they will close locations and focus on only those who make them money. Keeping in mind that a LOT of restaurant owners did not survive the brilliant shut-down laws from a few years ago. Personally, I only go to restaurants in my area that are family-owned because I know them, they are part of the community. Corporate chains are a definite no for me.
More automation instead of people. There are already some fast food locations with 0 counter people. They simply operate on mobile-only ordering and then pick-up or uber eats, etc delivery since they don't have to pay for that.
There will be more emphasis on what they will call "value meals" or packages which of course means no nutritional value for the customers.
The chains that were already paying at this amount, like In-n-Out will be fine but those are mostly in bigger cities. More suburban areas will struggle. And those folks are already near poverty as it is.
California is expensive because they don’t build enough housing
minimum wage in Texas is $7.25 while the cost for Big Mac is a dollar more on average compared to Washington which has a minimum wage of over $16. The link between minimum wage and fast food cost just isn’t that strong. Automation is good. It increases worker productivity
Exactly, and don't forget the unions who will be liking their chops to reset their wage scales as well.
This will get u-g-l-y for certain income sectors, but the media will blame the consequences on anything but overpaid non-skilled labor costs. Other state vote-suckers will hold California up as a model for their nominal dollar wages, but forget to mention the ensuing reduction in purchasing power of those "new" wage dollars.
Edit: "U-g-l-y" is a banned word? 🙄
That's because there is not enough incentive for developers to build more or there is no more infill land inside CBD's to build it. Those guys don't run from a chance to move dirt and put up buildings if there are fees or profit to be had. The most highly regulated affordable housing markets (NYC, Chicago, San Fran, etc.) have the greatest shortages of it because the regulations take away incentive to build it, buy & sell it and maintain it, in the name of "tenant rights". Thomas Sowell has written some very insightful stuff based on his research on this topic.
I work in the Fannie and Freddie housing finance space, as well as Tax Abatement multifamily housing and I see the ramifications affecting efficiency in these markets.
the regulations are onerous but it’s not from tenant rights. It’s from homeowners that want restrictive zoning laws. we need to allow developers to build a ton of units
I just searched and the big mac cost between WA and TX is less than a dollar…..28 cents to be exact.
It's still comparing apples and oranges. CA does a lot of strange stuff. Did you see what happened to the average cost of meals, fast food and otherwise, during the pandemic. Restaurants added all kinds of nonsense, extra charge for using another plate or utensil, extra charge for cleaning, extra charge for worker safety (facemasks). Food bills now look like a CVS receipt.
The food has to get to their locations. Gas is more expensive here than anywhere else because we have to have a "special blend". It has made the inflation issue worse than in other states. We pay more for water and power. CA recently suggested we start paying power rates based on income. You know how that will hit fast food restaurants? I don't think any state pays more for grocery/food than Hawaii but right after that comes CA.
Automation reduces the workforce. Doesn't matter how productive you are if you don't have a job. And frankly, I don't buy that motivational theory. It is an absolute struggle out here for small business owners to even do business. The hoops you have to jump through, the licensing costs, the taxes, the regulations, are a massive burden. Fast food franchise owners are struggling upstream every time the state imposes some **** new fee or regulation.
And as will all forms of regressive policy, ie taxes, the cost just goes downhill to the consumer. I believe the consumer in CA for food/eating out will hit their limit.
taxes aren’t inherently regressive. An LVT is actually productive and incentivizes businesses to produce as much as possible. As far as pricing probably depends on the source used but neither here nor there as you pointed out it’s much more complex than minimum wage. Automation is always good as it frees up the labor force to perform more complex tasks instead of doing menial work. This is how our economy has become so advanced in the first place. I don’t disagree that California has some wonky laws especially that food labeling one but I think the impact on cost is also overstated. Source I found has Georgia at 11 and California at 19 for grocery bill
Average weekly grocery spending is highest in California ($297.72), Nevada ($294.76), Mississippi ($290.64) Washington ($287.67) and Florida ($287.27).
https://www.helpadvisor.com/community-health/cost-of-groceries-report#:~:text=1%20U.S.%20households%20spend%20an%20average%20of%20%24270.21,the%20least%20on%20groceries%2C%20on%20average.%20More%20items
I believe your source (Zippia) used only Los Angeles to represent CA, while using ATL to represent GA. That is not a solid data point comparison.
For instance, in California, the average weekly grocery spending is $297.72. Cities like Riverside and San Francisco are even higher at $300.50 and $298.44, respectively. Orange County grocery bills are 11% higher than the national average.
Menial work is needed in any modern society. It is what it is.
Mid 2022, CA had a budget surplus of $97.5B. 8 months later it had morphed into a $22.5 billion shortfall. The taxes they continue to put in place are erasing the middle class here. I want to leave….and yet with a net worth of at least $2M, which includes a lot of property owners, if you leave, CA will hit you with a .04% exit tax. You can't even leave the state without being punished.
Uh, no. You have never lived in California, have you? It's expensive because of state and local taxes.
There is a nationwide housing shortage, not just in California. The American population has increased by around 50 million in the last 20 years, but the housing market hasn't kept up. That's why housing prices continue to increase despite higher interest rates. My wife is one of the top Realtors in the Pensacola area and right now she can barely keep up with business. Last year was a little slow, but 2024 is blowing up. There are new neighborhoods being built all over the place and they sell as fast as they can build them. I imagine there is a lot less red-tape for builders in Florida than California. California just isn't business-friendly.
They won't have to demand
In my neighborhood, the trades are slammed busy. Not only are they getting 30 % more than this time a couple years ago, it's a 10 day to 3 week wait to get a job started.
Californians should eat more Big Macs and donuts so they can build more houses? Did we solve it?