On January 1st California’s AB 257 will go into effect. This law, enacted in September, creates a 10-member council empowered with broad authority to set wage and working standards at the state’s fast-food restaurants. It also authorizes localities with 200,000 or more residents to establish their own councils. This law may be well-meaning, but it will stifle opportunity—especially for younger, entry-level workers—decrease options for consumers, and slow economic growth.
Employment in food services and drinking places in California is still 41,000 jobs below its pre-pandemic level, as shown below.
AB 257 will only make it harder for restaurant employment to recover. The new council is authorized to increase the minimum wage up to $22 per hour in the fast-food industry, a 42% increase from the scheduled state minimum wage of $15.50. Research shows that higher minimum wages reduce employment for teens, young adults, and those with less education.
Fast-food is often a first job for many teenagers (my first job was at a Burger King), but it will be difficult if not impossible for a manager to justify paying an inexperienced worker $22 per hour, or $44,000 per year for a full-time worker. Wages are based on worker productivity, and teenagers typically cannot produce $22 worth of value per hour.
In fact, a study finds that increases in the minimum wage are the leading cause of the decline in teenage employment since 2000. Worse, the study also finds that teens from areas with...
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