More inflation is coming your way. California again leads the way.
Please note California Gov. Gavin Newsom Signs Law to Raise Minimum Wage for Fast Food Workers to $20 Per Hour.
California fast food workers will be paid at least $20 per hour next year under a new law signed Thursday by Democratic Gov. Gavin Newsom.
When it takes effect on April 1, fast food workers in California will have among the highest minimum wages in the country, according to data compiled by the University of California-Berkeley Center for Labor Research and Education. The state’s minimum wage for all other workers — $15.50 per hour — is already among the highest in the United States.
Cheering fast food workers and labor leaders gathered around Newsom as he signed the bill at an event in Los Angeles. “This is a big deal,” Newsom said.
The $20 minimum wage is just a starting point. The law creates a fast food council that has the power to increase that wage each year through 2029 by 3.5% or the change in averages for the U.S. Consumer Price Index for urban wage earners and clerical workers, whichever is lower.
A Big Deal Indeed, Expect More Inflation
Yes, governor, this is very big deal. It will increase the cost of eating out everywhere.
The bill Newsom signed only applies to restaurants that have at least 60 locations nationwide — with an exception for restaurants that make and sell their own bread, like Panera Bread (what’s that exception all about?)
Nonetheless, the bill will force many small restaurants out of business or they will pony up too.
30 Percent Raise Coming Up!
If McDonalds pays $20, why take $15.50 elsewhere?
The $4.50 hike from $15.50 to $20 is a massive 30 percent jump.
Expect prices at all restaurant to rise. Then think ahead. This extra money is certain to increase demands for all goods and services, so guess what.
Expect More Inflation Everywhere
Biden is doing everything humanly possible to stoke inflation with EV mandates, natural gas mandates, union pandering, student debt forgiveness, and regulations, some of which is blatantly unconstitutional.
Meanwhile, California is setting the standard for all the blue states with his own set of preposterous laws.
Oil Price Tops Highest Level Since Summer of 2022, What About the SPR?
On the energy front, please note Oil Price Tops Highest Level Since Summer of 2022.
Irony of the Day: California Regulations Boost Diesel Truck Orders
Also note the Irony of the Day: California Regulations Boost Diesel Truck Orders
“The vehicles don’t exist, the infrastructure does not exist, grid reliability is sketchy, there’s nothing to protect public agencies from price gouging,” said the League of California Cities and State association of Counties in a letter to the air board.
Mish: It’s not that I am a big fan of diesel. In fact, I am no diesel fan at all. But you cannot double or triple costs on the industry when the infrastructure is not even in place.
Refining Capacity Energy Crunch
Thanks to Biden’s nationwide regulations, refining capacity is shrinking.
Here is the result: Energy Crunch: Demand for Diesel and Jet Fuel Soars But Refining Capacity Sinks
Biden Newsome Tag Team
Biden’s energy policies have made the US less secure on oil, more dependent on China for materials needed to make batteries, fueled a surge in inflation, and ironically did not do a damn thing for the environment, arguably making matters worse.
See The Shocking Truth About Biden’s Proposed Energy Fuel Standards for discussion of the administration’s admitted impacts of Biden’s mileage mandates.
Newsom is doing everything he can to make things even worse.
The tag team of Biden and Newsom is an inflationary sight to behold.
Fast food restaurants should be where the most marginal workers exist. The work is relatively basic and of little consequence if done poorly. It’s perfect for young/immature laborers who have yet to grow into a mature & responsible cog of modern society.
Artificially propping up FF wages will result in more responsible workers remaining at McDonald’s simply for the $20 per hour. This will be good for the quality of the FF labor force but will be a challenge for other low wage industries such as childcare and even entry level nursing and education positions. Those industries will be forced to match the FF wages or deal with constant churn of their workforce. So prices go up across the board or we have the least job-ready workers watching our kids and tending to the aged.
Fast food workers in California deserve this. People everywhere should be able to make a livable wage and California is ridiculously expensive. In general, Gavin Newsom sucks as he has sold out his state to the highest bidder, but I have to give him kudos here for looking out for the workers. This is what politicians should be doing… listening to their voters.
I love it.
He should have made the raise to $100.
That way he wouldn’t have to do a sequential bunch of raises as everyone else gets more raises to keep up with the cost of getting raises.
“This is a big deal,” Newsom said.
But not in the way Newsom pretends it is.
Perhaps DeSantis will bring this up when he and Newsom debate on Nov 30th?
Without the raise how will fast food workers be able to afford to eat where they work?
Should have added /sarc
Starting pay a In-n-Out and The Habit is already $19/hr in the nicer parts of Calif.
Could McDonalds buy a bakery and bake their own buns? Are they already doing that? Could someone invent a bun that can be quickly cooked in a microwave?
Seems baking your own bread is a very easy way to get around this.
Interesting.
Does the law specify exactly what percent of bread must be baked and where?
Hyperinflation has to start somewhere.
Usually slowly at first.
Then all at once.
Government will not default on Government debt.
Government will “print” to meet any and all obligations.
This will not end well.
Scared that you may be right.
Inflation IS default on the national debt. 2% inflation is just the tip.
Technically non-payment when due is default.
Inflation is a privilege of Government.
Like seignorage is a privilege of Government.
Just be thankful the Government is not charging demurrage on your cash.
Yet.
I often get 2 sausage biscuts st mcdonalds for $2.50. It pisses them off i dont want the $2.79 hashbrown to go with it. ‘Is that all!’
So we will soon find out how many people are willing to pay $9 for a hamburger that tastes like it’s made from sawdust.
This will hurt corporate restaurants badly.
But not all restaurants will be impacted. Ethnic restaurants that use illegal and/or off the books workers will survive and prob do well. The workers share the same language and culture from their homeland and they stick tgthr to survive in their new country.
If you speak up you’re out of a job, and worse, your fellow workers are then out of work. All b/c of the guy who snitched. Care to guess as to how that is handled?
I expect many more food trucks operating in CA. They’re mobile and can avoid the places where any enforcement is likely to occur, which is easier to find out these days with the Internet thingy on our phones.
$20/hr for fast food workers? Gloom and doom? Lol. McDonalds workers in Denmark have been making $20/hr for a long time AND get 6 weeks paid vacation and burgers there are about the same price here.
link to snopes.com
I suspect in a few years California GDP will jump to $4 trillion and people will be mad that the policy served the state well. Lol.
If California doubled its pension payouts then its GDP would soar!
I’m eyeing this list.
link to scrapehero.com
Two possibilities:
1. These companies profits will go up – time to board the long money train.
2. These companies profits will go down – time to board the short money train.
Here endeth the lesson.
They’re probably getting a lot more work done per hour in Denmark than in Las Angeles.
Higher wages are not the cause of inflation. They are the effect of inflation. Note that it is the higher prices that came first. The higher wages are following with a lag of about 2 years.
Correct.
We are now entering the wage->price spiral in earnest because these wages will in turn cause prices to go higher which will then require even higher wages and on it goes.
The increased amount of money in the system came first.
Followed by higher prices.
Followed by wage increases.
Followed by higher prices.
Followed by wage increases.
Followed by higher prices.
Followed by …
Wait, where’s the recession?
Bring back the Jack-In-The-Box clown head. They were a half century ahead of the times.
Logical explanation of why this is good.
link to smbc-comics.com
Oct Gov shut down. CA SNAP might be paid in Oct, but the liberal dictatorship,
might run out of money in Q4. Millions of CA poor might rise against gov Newsom, ex those who work in junk food outlets.
If companies rise prices to increase profits and share buybacks, that is not inflationary. But if they raise wages that is inflationary. The neoliberal narrative is shameless.
I find it strange that you can have a minimum wage that is higher in one industry than for all others in the state. I expect that California will have to align its minimum wages on the one for food workers within the year and that will cause inflation. Great opportunity for landlords to raise their rents now.
Wait until they get their raises next April.
Then raise the rents.
The minimum wage in CA is currently $15.50/hr and will increase to $16/hr on Jan 1.
I met a friend for lunch at the local Max’s here in the SF Bay area the other day.
A small bowl of matzo soup was $9. A turkey & swiss sandwich was $18. Whew!
Grilling. a burger and dressing it is not unskilled labor, you miserable cheapskate. Keeping a kitchen clean and keeping morale high makes for a better product and a better overall experience at a business that you feel better about patronizing. Look no further than an In and Out & Whataburger.
I bet you think UPS drivers are overpaid unskilled labor, too? You try it one day and tell me how much I’d have to pay you to keep coming back everyday — let alone performing the job like you don’t hate it.
And careful over-endorsing robots; unless you’re a stripper, your gig is likely just as susceptible to automation as the next slob’s.
Add unskilled labor to the caravan fleeing California for high taxes. You don’t hire unskilled labor for $20/hour.
You do when the Government demands that you do.
I don’t think increasing minimum wage will cause inflation because it doesn’t change the money supply. The businesses have to get that money from customers, who then will have less money to spend. Or they’ll close due to the higher labor costs.
Simple.
Money velocity increases.
Don’t need more money.
That doesn’t make sense.
It’s the difference between a stock and a flow.
The same dollar can be used more than once in a year.
Read Dr. Steve Keen, and he is on youtube.
It’s a pretty good rule of thumb that the cost of a flagship meal (say a quarter pounder combo) correlates well with the prevailing minimum wage. So say hello to the most basic prepared lunch you can buy costing most of $20. It has to be that way since labor is a large component of the cost. At least until the robots come, that is.
Normal suburban type kids used to work these jobs – no more. I remember McD’s sending out short busses to bring ghetto kids to suburban stores but now mostly non English speakers increasingly commuting by electric bikes. Big chains like Micky D’s will invest to automate a lot of this entry level work when it gets this pricey, smaller food places who can’t afford the investment will fall by the wayside. Restaurants are headed to a massive die off, the cost of a middle of the road meh meal is outta sight. It’s just not worth it!
Here at the Jersey shore third world workers used to commute on bikes on the shoulder of busy roads with Americans buzzing past them in big SUVs. Now a lot of third worlders have electric bikes that can almost keep up with traffic, no license, registration or insurance for these people who are probably here illegally for a long time. It’s like parallel universes.
Less junk food ==> less heart attacks and strokes. CA will chop the astronomical
cost of healthcare.
Ha ha that’s funny. They’ll give the health care workers a huge raise so they can still afford to eat lunch.
Yeah, that’s an auxiliary outcome from the slippy slope of central planning. Government requires health insurance for all, and that necessarily requires them to intervene in the marketplace to address those things that threaten the health insurance industry — such as junk food.
Of course, its not a little ironic that highly processed garbage food is so much cheaper than unprocessed healthy food. The poor traditionally were illustrated as skinny while the rich were obese, but today its quite the opposite.
Maybe the market distortions that have led to a highly profitable & strealined industry of garbage waste products posing as foods need to be straightened out so as to make them less desirable for those at risk. I know I’m going to McDonalds less now that it costs $10 or more for a meal.
On the other hand, cracking down on cheap junk food won’t make good food cheaper, at least not overnight. The poor will get squeezed no matter what.
A year or so ago i had a conservation with some chic filet mangers. They were talking about having to get a machine to batter the chicken.
20 bucks an hour and bet you dont have to pass a drug test.
Chick Filet is gross. Peasant food tarted up to seem like middlebrow fare. They use Tyson chicken which is sub-human fodder. Enjoy.
Their drive thru’s are always jammed. Must be doing something right.
Yep, they’ve figured out the pallet of the average American — fat, salt , sugar & zealotry — about as hard to crack as counting backwards from 3 with your eyes closed.
30% here, 40% there, 46% with 20% less work coming soon for UAW.
Massive wage spiral. Hello!!!
Now in addition to Congress & the Fed, corporations have decided to spend their way out of rising profits.
Woohoo!
Takes effect on April Fool’s day? Nice touch.
Newsom is watching to many episodes of hells kitchen
The wage increase will definitely increase prices but additional more devastating effects will be:
1. People will consume fewer services. I’ve cut my restaurant spending by 50% in the past 2 years and even more people will join me in CA as prices go from insane with totally unacceptable.
2. Restaurants will go out of business. See point one.
Politicians who try to stop the market from working cause the market to work in other ways.
And since people will eat out less, stores will be pushing hard for big tips to make up the loss of business.
You have a choice to go to a restaurant less, but have you been to one of the fast joint?
How many of the customers are able to boil an egg?
Interestingly, I have taken to steaming my hard “boiled” eggs.
I bought a steamer off amazon for I think $8. Really convenient. Put in the eggs, add water, press a button. And 15 minutes later I have 7 hard boiled eggs.
Wow that makes my saucepan seem so primitive. I have to put in the eggs, add water, press a button and wait 4 minutes. I’ve been wasting my life. And to think if I’d only spent $8 I could be waiting a further 11 mins… wait?… What?
Traditional restaurants are a different model because the servers (waiters/waitresses) are exempt from minimum wage laws (ie waiters/waitresses) because they make their money via tips (undeclared cash).
Their costs will likely end up lower than fast food places because of it. Here in Florida I can pick up a to-go lunch at a mom and pop place with traditional servers for less than what I’d pay at one of the fast food places.
Listened to a podcast from an American permanently living in China. Coming back after covid lockdowns he was experiencing sticker shocks. At a restaurant he had to choose and order a meal at the cashier, and still automatically charge a suggested tip of 20%. This is standard practice now, used to be 15-18%, but that’s history.
Obviously, this wouldn’t shock him if it was the same in China.
Fast food definitely ain’t cheap anymore. Ironically this is probably a big health benefit as people eat less of this unhealthy and overpriced food.
Eating out is such a collasal waste of money to begin with. Also goes along with excess calories and weight. It’s perplexing to see this especially when a fair amount of people are living paycheck to paycheck. Same people going to Starbucks for 7 dollars a coffee.
The 60 locations is an interesting number. Wonder why not a more round number like 50 or 100. Some donor have 59 locations?
Lots of smaller mom and pop chains here in Florida (think 10 – 15 locations in the Miami – West Palm corridor). They routinely cost less than the big chains for burgers/chicken etc and usually taste a lot better too. Surely this is the same in California in which case it should spell doom for the big chains rather than a bonanza of money for workers.
The Moms and Pops are going to have to raise their wages as well to compete with the $20/hour locations. The 60 locations is probably a carve out for political purposes. Sadly, you’ll be paying more for moms/pops as well.
Maybe. Remember these wages are being set high because the fast food places don’t have traditional servers who are exempt from minimum wage laws (ie waiters/waitresses) because they make their money via tips (undeclared cash).
So those mom and pop places can still pay $5/hr if they have traditional servers (they can still have a drive thru too) and then win big because their cost is much lower.
Probably not since the chains will simply mechanize operations and eliminate non-productive workers. Newsome will get what he wants. More wards of the state