California just raised its minimum wage for fast-food workers. Cue the outrage

President Joe Biden has a long-term vision for America’s economy—one that’s largely been obscured by the short-term disruptions of our post-pandemic reality. Of course, while inflation has dogged nearly every economically advanced nation over the past several years, the U.S. economy under Biden has performed exceptionally well in comparison with its counterparts and is getting better all the time.

But while improved economic metrics are no doubt a relief, Bidenomics is really about driving a stake in the heart of the pernicious trickle-down ethos that’s persisted since the Reagan era.

Bidenomics, according to Biden himself, is about growing the economy “from the middle out and the bottom up.” And California has just taken a big—and controversial—step in that direction this week.

RELATED STORY: US added a robust 303,000 jobs in March, signaling economic strength

According to CNN, as of April 1, about half a million fast-food workers in the state will be making at least $20 an hour. The new minimum will apply to restaurant chains with more than 60 locations across the country.

Naturally, any public policy change of this scope is going to have ripple effects, and, indeed, if you do a quick Google News search on California’s new law, you’ll see one hand-wringing article after another that focuses on potential price increases, lost jobs, and pared-back hours. In other words, if you buy into the usual pro-corporate, anti-minimum wage arguments, you’re inclined to believe this new law will actually hurt the workers it purports to help.

One such take was published in Barron’s, which is—oh, lookee here—owned by News Corp’s Rupert Murdoch. You might say the publication is the respectable older sibling of Fox News, in that it’s less “Jeanine Pirro drunkenly screaming at a waiter” and more “Ivy League-educated economist leaving 5% tip for waiter because the bouillabaisse was served with a tablespoon instead of a soup spoon.”

The Barron’s piece includes a litany of complaints from business owners who are worried that increased labor costs associated with the new minimum wage will force them to raise prices, lay off workers, freeze hiring, or cut back hours:

Rising labor costs could push the fast-food industry, including its thousands of franchisees, to further raise prices in the state that already has some of the highest living expenses in the nation.

But higher prices can be a tough choice in an economy with already-sensitive consumers. Fast food, especially, remains one of the areas with stubbornly high inflation rates, even as grocery prices have cooled down.

But that’s not the whole story. In fact, amid all the doom and gloom, Barron’s—almost as an afterthought—hit on one potential boon for workers.

Although the new rules only apply to fast-food chains with more than 60 locations, it might force other full-service restaurants and small businesses to raise their pay as well as compete for labor, said David Smith, a professor of economics at Pepperdine University.

Wait, so there are actual advantages to this law, other than giving thousands of fast-food workers a much-needed and well-deserved raise? According to some economists, yes. And contrary to the hoary talking points trotted out by Republicans and their confederates, improved minimum wage laws don’t merely pad the entertainment budgets of teenagers from relatively well-off families. For one thing, the argument that teenagers are the real beneficiaries of such laws is not true, and for another, that claim is largely irrelevant to the current discussion. 

A January 2014 report from Brookings noted that many who would benefit from an increase in the minimum wage were actually low-wage workers who were making marginally more than the minimum. Because an “increase in the minimum wage tends to have a ‘ripple effect’ on other workers earning wages near that threshold,” argue the report’s authors, “we find that an increase could raise the wages of up to 35 million workers—that’s 29.4 percent of the workforce.”

In other words, while the media—particularly the financial media—seem quick to highlight the new law’s downsides, the upsides are obvious if you bother to look for them. One contrary take in support of California’s new minimum wage for fast-food workers comes in the form of this MSNBC column. Helaine Olen, a reporter in residence at the Omidyar Network, notes that the usual arguments against minimum wage increases completely ignore the reality of rampant corporate greed:

Moreover, labor is far from the only expense faced by fast-food restaurants. Where are the pundits asking why McDonald’s raised the royalty fees that franchise owners need to pay the corporate parent last year? What about the marketing fees — which can total 1% of revenues — that name brands charge those owning franchises?

Few doomsayers point out that as prices at many fast-food establishments rose at double the rate of inflation over the past decade, profits at corporate giants such as Domino’s and Chipotle remained quite healthy. Industry profits, in turn, are fueling share buybacks, fattening the wallets of the richest 1%. The Roosevelt Institute recently calculated that the 10 largest publicly traded fast-food corporations spent $6.1 billion on share repurchases last year, a sum significantly greater than the estimated $4.6 billion the California pay boost will cost annually.

Of course, it’s fair to ask why the ultra-wealthy, who’ve made out like bandits over the past 50 years, aren’t similarly scrutinized for their role in increasing prices to the detriment of consumers. In fact, one recent study found that “corporate profits drove 53% of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic” representing “a massive jump from the four decades prior to the pandemic, when profits drove just 11% of price growth.”

But as the old saying goes, you can’t make an Egg McMuffin without breaking the spirits of millions of oppressed and exploited workers, so the beat goes on. That said, is the conventional wisdom that higher minimum wages are bad for business even true? According to Michael Reich, an economics professor at UC Berkeley, and Justin Wiltshire, an assistant professor of economics at the University of Victoria in British Columbia, it’s not.

In a recent commentary for Cal Matters, the economists argue that minimum wage hikes can actually help fast-food restaurants by making it easier for them to retain their workforce creating more experienced, productive staff, lowering recruitment and retention costs.

Unfortunately, the national minimum wage is still stuck at $7.25 an hour, which is an absolute joke in every way—assuming you don’t require your jokes to be funny. Biden, who’s already increased the minimum wage for federal workers to $15 an hour, would like to do the same for all American workers.

That’s because Bidenomics, as the president envisions it, involves a long-term restructuring of the economy that will necessarily be gradual, but will ultimately be both more fair and more conducive to broad-based growth. 

According to Whitehouse.gov, Bidenomics is based on three “key pillars”: investing in America, empowering and educating workers, and promoting competition to lower costs. Biden has already largely made good on erecting that first pillar, and with workers projecting their power across the country—with Biden’s help—he’s starting to build the second as well. 

Of course, Republicans always seek to catastrophize any public policy change that is an advantage to workers, but somehow they’ve missed the trillions of dollars in wealth that have been siphoned upward to the already wealthy over the past four decades.

And as the Economic Policy Institute notes, the growing divergence between productivity and worker pay that’s occurred over that time was hardly an accident:

Starting in the late 1970s policymakers began dismantling all the policy bulwarks helping to ensure that typical workers’ wages grew with productivity. Excess unemployment was tolerated to keep any chance of inflation in check. Raises in the federal minimum wage became smaller and rarer. Labor law failed to keep pace with growing employer hostility toward unions. Tax rates on top incomes were lowered. And anti-worker deregulatory pushes—from the deregulation of the trucking and airline industries to the retreat of anti-trust policy to the dismantling of financial regulations and more—succeeded again and again.

It’s long past time for workers to reclaim more of the wealth they make possible, and both Bidenomics and new laws like California’s are encouraging steps in the right direction.

If only the financial media did a better job of focusing on the big picture, rather than just the parts that make their corporate masters the happiest.

RELATED STORY: Restaurants want to amend Arizona Constitution to pay servers less than minimum wage

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