Econometer: Is the negative effect of the $20 fast-food minimum wage overblown?

Lynn Reaser, economist

YES:There are five considerations: prices, sales, jobs, hours and investment. Anecdotal evidence and academic studies suggest that price increases will be moderate, averaging 7 to 12 percent. The increase will irritate consumers, but they will grudgingly accept the higher prices. Restaurants need workers and will compete better with other industries. Worker turnover is a major cost for business and will be less with the $20 wage. Digital and other investment will continue to hold down costs.

Executives

Jamie Moraga, Franklin Revere

NO: Companies won't absorb this increase; they raised prices in response. Consumers will also see higher service charges, reductions in food portions, less service and store closures. Companies will continue to pivot to automation, which can eliminate jobs, cut hours, and reduce benefits and compensation. Californians already have the highest prices across the board, and there's no end in sight. The lack of affordability will drive both residents and businesses out of the state.

Haney Hong, San Diego County Taxpayers Association

NO: Money doesn't grow on trees, and it's coming from somewhere in the economy. We continue to see widening income inequality and growing poverty in California. Let's not forget that recently many of us here thought that San Diego's population was going to continue shrinking. The impacts are yet to be seen, and if this was intended to help the working poor, all the recent minimum wage increases don't have a lot to show for it.

Phil Blair, Manpower

NO: We are naïve if we think mandated programs that increase the cost of doing business will not be passed on to consumers. Fast-food companies that are affected have two choices — raise prices or cut staffing levels. Or both. This mandate is especially unfair since it covers only large national chains and not middle or small operators. Legislation that targets one group of workers for increased benefits and not others seems innately unfair. Plus, labor supply and demand would have moved these workers up to this level on its own very soon.

Gary London, London Moeder Advisors

YES: The wage increase will undoubtedly raise fast-food costs. Consumers are more likely to pay than lower their consumption of fast foods. Higher wages are important. But many of these jobs are traditionally filled by teenagers as a valuable skill trainer. That seems to have been overlooked. It is also more likely that technology will take a good portion of these jobs, the net result possibly being the achievement of nothing.

Bob Rauch, R.A. Rauch & Associates

NO: Minimum wage increases for fast-food workers impact wages throughout the organization and market. They hurt the most vulnerable and harm total compensation as employers cut hours, reduce benefits, automate or close. Minimum wage hikes result in fewer jobs, fewer hours, fewer benefits and less consistent hours. Minimum wage increases also destroy teen job opportunities and cause prices to rise. Expanding job opportunities through pro-growth policies raises wages for all. Imagine if California did that.

Austin Neudecker, Weave Growth

YES: Generally speaking, incremental increases to the minimum wage have a net positive economic impact. However, I take issue with the new wave of minimum wage bills that target specific industries or professions. I do not understand why some workers should have a different minimum. Such laws will continue a cascade of selfish lobbying rather than a reasonable assessment of the cost of living, economic viability, state competitiveness, and other factors.