The Real Minimum Wage Is $0 - California Edition
The law can say what you've got to pay to employ someone but no law says you've got to employ anyone
One of these deeply vicious statements neoliberalism is prone to - the real minimum wage is $0 an hour. For while the law can indeed insist that you’ve got to pay some number higher than that in order to employ someone there’s absolutely no law at all that states that you’ve got to hire anyone. Thus and therefore there’s always that possibility from the other side, of not having a job nor an income at all.
At which point we get the latest example of this. Historically I think my favourite example was a progressive militancy organisation called Acorn. Who were most put out to find that yes, they did in fact have to obey the prevailing minimum wage laws when paying their community organisers. But, but, that means we can do less community organising within our limited budget! Well, yes. The joyousness here being that a major plank of Acorn’s platform was a higher minimum wage. The one they’d just won on in fact and then didn’t wish to have to pay.
California Pizza Hut franchises laying off delivery drivers before new $20 minimum wage
Minimum wage goes up, some people lose their jobs. Ho Hum, how annoying that reality concords with us neoliberals, eh?
Of course it’s better than that because this is *California* progressive politics:
A new California law means fast-food workers will be paid more and a new state entity will oversee working conditions in the industry.
On Sept. 28, Gov. Gavin Newsom signed AB 1228, which sets a $20 minimum wage for fast-food workers starting on April 1, 2024. The fast-food employee minimum wage will increase annually until 2029, based on the Consumer Price Index. The law applies to chains of limited-service restaurants consisting of more than 60 establishments that share common branding, marketing and products.
So, it’s only the big chains. It’s also only fast food chains. What it does not cover is delivery companies - even those who deliver fast food from the large chains. So, what’s actually happening is that the directly employed drivers at Pizza Hut are getting fired and the load will be picked up by DoorDash and the like. Where drivers don’t get that guaranteed $20 an hour.
So, you know, well done there gentlemen.
However, it’s possible to take this a stage further. The standard analysis is that a low minimum wage makes near to no difference. One at 40% of median wage doesn’t matter - either way. For near no one ever gets paid 40% or less of median wage. Therefore near no one gets a higher wage as a result, also near no one gets their job threatened by that new higher wage.
At some point it does matter - $100 wages for all is sure gonna create a lot of unemployment. But where? The logic is that as the minimum wage starts to bite on the incomes of a larger number of people then it causes more problems. So, the exact level where the problems - the unemployment - are greater than the benefits - the higher wages to those who keep their jobs - depends upon how wages are “bunched”. If everyone works at around median, very little wage inequality, then you can get pretty close to median wage without having much effect either way. The wider the wage distribution then the lower the rate at which the minimum causes problems.
The standard estimation is that at 50 to 55% of median wage then the problems become greater than the number saved from their pitiful negotiating position in the marketplace. That’s not an accurate number, depends upon time and place, but I can think of at least one internationally known and lefty minimum wage expert who would agree with me. Largely because he told me this so that’s why I use it.
But let’s go a little further. 60%? Fair number to use? Just to make sure that we’re including all those who would argue for a higher minimum wage but are still compos ment. enough to agree that a really high one will cause problems?
OK, 60% of median wage then. So, San Francisco, median wage is $31.50 an hour. $20 is 63%, we’re in that danger zone, obviously. And we’re seeing those Pizza Hut drivers losing their jobs. So, we’re about right in our initial estimations of 55% and above then. More than that isn’t the sort of number that an employer just shrugs and coughs up. Behaviour changes. In Fresno median wage is $19.59. This new minimum of $20 is above that median wage in that metropolitan district. We’re gonna see a lot more than just the Pizza Hut drivers going, aren’t we?
It is, of course, still entirely possible to support the idea of minimum wages. I don’t but that’s because I’m a neoliberal bastard who insists that the only real minimal rate is $0. But, you know, others insist that they can indeed trade the costs and benefits to other people. Noting, obviously, that the people who carry that cost of a min wage that’s “too high” never are the people who set it.
But imagine how bad you’ve got to be at economics to set the minimum wage at above the median wage for large parts of the State? But, then, you know, California progressives.…