By Rebekah Paxton
Tuesday, May 07, 2024
Last month, California implemented an unprecedented
$20 minimum wage for fast-food workers. Now, labor unions and their activist
partners want to extend this wage rate across industries.
Golden State lawmakers don’t need to speculate about the
consequences of such a policy; a near-$20 minimum-wage experiment has already
played out in their own backyard.
In 2021, Unite Here Local 11, a controversial Los
Angeles-based labor group, picketed its way into a $17.64 minimum wage for
hotel workers in the City of West Hollywood, the highest rate in the country.
The union didn’t stop there; within the same year, it successfully pushed to
spread this policy to all industries in the city.
As a result, West Hollywood’s minimum wage increased
sharply, rising from $13–$14 in 2021 (depending on business size) to a peak of
$19.08 per hour last July.
The consequences of the policy were devastating and
immediate.
Numerous businesses slashed hours, cut staff levels, or closed their doors. Carmen Bolas, a small-business owner in West Hollywood, laid off 40 percent
of her staff in a last-ditch effort to keep her business alive after the wage
hike. The New York Times reported on another local restaurateur, Josiah Citrin,
who was forced to reduce his staff by 30 percent.
Marco Capanni, who closed his restaurant after 30 years, lamented, “For a
small business like ours, it’s costing us a few thousand dollars to meet this
new minimum wage . . . which is the highest in the country. It’s really tough
for us.” This wasn’t an isolated event. Roughly eighty-five businesses shuttered in West Hollywood last
year alone.
Perhaps unsettled by these consequences, the city
commissioned a study in February of this year to assess the impact of
the minimum wage on local businesses and employees. The results were sadly
predictable.
The study found that 22 percent of hourly workers in West
Hollywood lost their jobs, with an additional 17 percent experiencing reduced
hours. Employers saw similar stats. Forty-two percent of businesses were forced
to lay off workers or cut hours. Over one-third of businesses that reduced
employee hours turned to technology to fill the void.
West Hollywood was scheduled to have another wage
increase this July, compelling over 50 restaurants to petition the City Council to suspend the
hikes. The council agreed in a 4–1 vote, postponing future wage increases
until January 1, 2025.
While West Hollywood is a case study on the impacts of a
broad $20 minimum wage, California legislators can also look at the failed $20
minimum wage for fast-food workers. Just a month into its implementation,
businesses statewide are plagued with problems that virtually mirror those in
West Hollywood. This misguided policy not only led to job losses and business closures but also spurred price increases for customers, worsening an
already-fragile economy.
City and state lawmakers don’t need a crystal ball to
predict the outcome of a $20 minimum wage — they just need to ask their own
constituents who are living through it. The only question that remains is
whether California will acknowledge that its desperate search for “economic
justice” has put it on the road to economic ruin.
No comments:
Post a Comment