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Carol Platt Liebau: The Real Minimum Wage Is Always Zero

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No state can impose a twenty-five percent increase in its current minimum wage without expecting job creators to respond. So far, it’s been only two months since California raised the minimum wage for fast-food workers to twenty dollars per hour, but the negative impact is already clear.

There have been massive job losses—up to ten thousand. Chipotle raised its menu prices by roughly seven percent and Chick-fil-A’s prices increased an average of eleven percent. Red Lobster filed for bankruptcy and Rubio’s closed a third of its restaurants.

These outcomes were entirely predictable. Restaurants run on narrow margins. If the cost of paying employees rises, they have only a few options: Raise the cost of their food, cut employee hours, stop hiring — and fire workers.  

California’s experience recalls the sage observation of economist Thomas Sowell: the real minimum wage is always zero.

Young California workers are paying the price.

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