Business groups claim hard-fought $20 hourly wage victory will cause reduced hours, layoffs and price hikes – critics say otherwise

Business groups claim hard-fought $20 hourly wage victory will cause reduced hours, layoffs and price hikes – critics say otherwise

As fast-food workers celebrated a pivotal wage increase to $20 an hour in California last week, an old economic debate was awakened by business groups and others claiming the increase will wind up hurting workers through reduced hours and layoffs, hurt customers with price hikes, and harm the franchise owners of fast food restaurants.

Their critics are not so sure.

The hard-fought wage increase to $20 an hour from California’s current minimum wage, $16 an hour, was a compromise to initial demands of $22 an hour with annual wage increases. Representatives of fast-food workers and the fast food industry came to a deal to avoid what would have been a costly ballot initiative over the passage and signing of the California fast food sector bill last year.

“Frontline workers like me organized, went on strike, and fought to pass a historic law that raises our wages and gives us a seat at table with some of the biggest fast food corporations in the world,” said Anjelica Hernandez, a McDonald’s worker in Los Angeles for nearly 20 years. “Even though we are the engine of a billion-dollar industry, too many of us struggle to keep with rent, our bills and the rising cost of living.”

  • @grte@lemmy.ca
    15•9 months ago

    Business groups claim hard-fought $20 hourly wage victory will cause reduced hours, layoffs

    David Card was awarded the Nobel Memorial Prize in Economic Sciences for showing that this isn’t true.

    (The study (PDF warning))

    What was special about this research that won the guy the award?

    According to Card:

    the thing that has really influenced the field is the idea of looking for these pivotal events or things that have happened that could potentially inform our theorizing and understanding of the world.

    That is to say, they actually looked at real world examples and compared (meaning they actually included evidence in their reasoning) rather than assuming it must be so based on neoclassical economic assumptions.

    • karashta
      10•9 months ago

      I’m not sure most people understand how neoclassical economics is based on “arm chair general” style models largely divorced from reality.

      And how horrible an ideology it really is to have had infiltrate every aspect of western life and culture.

      The more I look at it, the more I see how a large part of our current societal issues can be laid at the feet of this ideology masked as science.

      • @vividspecter@lemm.ee
        2•9 months ago

        “Mechanical” models that have a veneer of legitimacy have certainly compromised peoples’ view of reality. See also views of traffic that treat it like a liquid, so politicians keep advocating for “just one more lane” despite induced demand being proven close to a 100 years ago.