Eakinomics has long believed that most of California public policy is designed to build a better Utah. That certainly looks to be the case for the Fast Food Accountability and Standards Recovery Act (aka FAST Act or AB 257). It was signed into law by California Governor Gavin Newsom on September 5, 2022, creating a council of labor representatives and granting it authority to raise the minimum wage for fast-food workers to $22 per hour.
Now, if you are a fast-food employee the prospect of getting a 41-percent increase in your wages sounds pretty nice. But as Isabella Hindley’s latest research shows, that is not the only consideration. The sharp wage increase would make each business instantly unprofitable. Given the share of wages in the overall cost structure (about 26 percent), Hindley estimates that prices would have to rise by 11 percent to break even. That’s bad news on top of the general rate of inflation. Also, it would mean less business for fast food outlets, which would translate to fewer outlets, or less employment, or both.
But that is just a self-inflicted wound for California. The more troubling part is that this feels like a rerun of the “Fight for $15” movement that began a decade ago. Now elected officials, including Senator Elizabeth Warren, have called for a federal minimum wage of $22. That would be terribly problematic. Hindley calculates the impact of moving to $22 in every state. Not surprisingly, in low-wage states like Alabama, Louisiana, or...
Professional rivalry and office politics were the driving forces behind the "false" sexual harassment and conversion allegations levelled against Tata Consulting Services (TCS) employee Raza Rafiq...