Understanding Minimum Wage Effects On Business Operations

When it comes to #production costs, especially #labor, minimum wage proponents tend to focus on #hourly wage. However, they forget that businesses view labor as a component of total revenue rather than hourly. When California implemented fast food wage hike, it ignored business realities in that hourly wage is just one component of total labor costs. In other words, businesses can cope by doing the following: 1. Reduce total labor hours. 2. Increase revenue per labor hour. To do that, reducing labor hours means exactly just that: workers work fewer hours at a higher wage. However, simply cutting hours can quickly compromise customer service. Thus, when all excess labor hours have been eliminated, business next identify all potential substitutions to tasks currently assigned to labor. Simple tasks such as taking orders can thus be assigned to kiosks, which is the classic #capital-labor #substitution effect. After businesses exhaust all potential substitution options and there are still substantial increases to labor expenses, the next option would be to explore potential #automation options, which spurs #technology #innovations. As new innovations come online, this not only allows businesses to cope with higher hourly labor expenses but also potentially eliminate jobs even in areas where no wage hike takes place. One more potential negative: businesses are going to eliminate labor-intensive menu items in favor of those can be automated. In the meantime, businesses can still raise prices if their products or services are compelling. If not, they'd simply assess whether it's realistic to continue to operate. In all of these cases, the outcomes are: 1. Reduced hours. 2. Fewer jobs (especially due to shutdowns). 3. Higher prices. 4. Fewer consumer choices. Hence, in this particular instance, the true minimum hourly wage will always be $0. Consumers will inevitably be worse off. https://lnkd.in/gWsrqXVc

Overall, the impact of the California Fast Food Sector Minimum Wage Ordinance on non-fast food restaurants and businesses like Boomers depends on various factors, including how we respond to the changes needed to increase wages in the “new” labor market. Additionally, we must decipher whether we can effectively manage any labor cost increases in the form of increased guest prices. Further increasing inflation in the State of California to an unprecedented new level, directly due to this new Fast Food Minimum Wage Ordinance, businesses cannot just absorb this new cost by the State of California. Here are four factors that Boomers must take into consideration: 1. Competitive Pressure: Non-fast food restaurants and businesses will face increased pressure to raise wages for their employees to remain competitive in the labor market due to the Fast-Food Minimum Wage Ordinance. Thus, if fast food workers are earning higher wages, employees in other sectors will seek similar increases, especially since there are overlapping job requirements and skills needed. 2. Operating Costs: A rise in the minimum wage leads to increased operating costs for all other businesses, including non-fast food establishments. Labor is a significant cost for any business, and an increase in the minimum wage will directly impact the bottom line resulting in increased prices for guests, reducing profits for businesses, or both. 3. Strategy Changes: Businesses may need to adjust their operations in response to higher labor costs resulting in reduced operating hours, cutting back on employee benefits, increasing automation with fewer employees and finding other ways to improve efficiency. These adjustments will have implications for both employees and guests of Boomers Parks. 4. Economic Impact: There are broader economic impacts from minimum wage increases, including effects from less job creation, guest spending and economic growth. While proponents of higher wages argue that a wage increase will stimulate economic activity by putting more money in workers' pockets, opponents often raise concerns about potential job losses, reduced business investment, or closure of these businesses. Business owners do not have unlimited lines of credit or cash in surplus to pay for these types of expenses that get handed down to businesses from government departments and organizations. https://lnkd.in/eEeRPKYK

The impact of the $20 minimum wage law in California on the fast food sector has raised concerns for workers. The passing of this law has led to troubling trends, as noted by recent data from mandatory industry reports by the Bureau of Labor Statistics. Key findings from the data include: - Job Losses: Since the enactment of AB 1228 in September 2023, privately-owned fast food restaurants in California have seen a net loss of 6,166 jobs (-1.1%) up to June 2024. - Year-over-Year Comparison: In the corresponding period before the law (September 2022–June 2023), the state had added 17,528 private-sector fast food jobs (+3.1%). - National Trends: While California faced job declines, national private-sector fast food employment increased by 1.6% during the same timeframe (September 2023–June 2024). - Wider Context: The decline of -1.1% in fast food jobs surpasses California's overall private-sector employment decrease of -0.3% during this period. These stats highlight the significant hurdles that the fast food industry in California is encountering post the implementation of the $20 minimum wage law. What are your thoughts on the $20 minimum wage? https://t.co/kwR7sQ76p5