California’s fast-food industry is dying a slow death. The California Business and Industrial Alliance (CABIA) recently released a full-page ad in USA Today that included mock “obituaries” of popular fast-food brands.

Why? Some of the Golden State’s favorite fast-food eateries have closed, impacted by the state’s new $20 minimum wage.

Is Raising the Minimum Wage a Good Idea?

Although the intention behind raising the minimum wage is often noble, the reality on the ground can be more intricate.

A recent New York Post expose revealed the grim toll of the state’s new minimum wage: 10,000 jobs slashed, iconic chains shuttering outlets, and consumers wallets feeling the pinch of price hikes.

California Governor Gavin Newsom signed Assembly Bill 1287 into law last year and went into effect on April 1, but many fast-food joints started adjusting before that.

Those adjustments included raising prices to offset the higher wages.

Several major chains, including McDonald’s, Burger King, and Cali favorite In-N-Out Burger, have already made the jump.

The Negative Side

“You can only raise prices so much,” CABIA president and founder Tom Manzo told Fox Business.

“And you’re seeing it. People are not going to pay $20 for a Big Mac. It’s not going to happen.”

A recent survey by LendingTree found that 78% of consumers now consider fast food a “luxury” purchase due to how expensive the meals have become.

Some fast-food spots have even moved to automation to deal with cutting employee hours to save money.

The intent behind AB1287 was to give fast-food workers more financial freedom in a state known for its high cost of living. However, we need to remember who minimum wage jobs were intended for in the first place.

We can all remember our first job. Many of us joined the ranks of the unwashed and tired at McDonalds or Burger King to get a few bucks while attending school. Allowing what could be perceived as a low-skilled worker to take that job instead prevents that worker from gaining crucial on-the-job experience.

Minimum Wage in Nevada

As the dust settles on California’s bold but contentious minimum wage experiment, Nevada should heed this cautionary tale and call for prudent policymaking in the Silver State.

Nevada will have a mandated $12 per hour minimum wage increase come July 1. The increase is part of Nevada Assembly Bill 456, passed in 2019, and plans to increase the minimum wage over five years gradually. The first increase went into effect in July of last year. A whopping $11 an hour is what your Nevadan minimum wage worker is getting. But what are they losing?

History of Nevada’s Minimum Wage

It’s been the same fight for a century in the U.S.

Let us go back to 2006 when voters approved the prior minimum wage amendment. Unfortunately, as the minimum wage increases began, the fiscal crisis hit, followed by a massive tax hike from Carson City and the Bush/Obama stimulus package. Nevada’s unemployment rate increased for 53 consecutive months, even as other states began to recover.

Voters eliminated Nevada’s two-tier minimum wage system in 2022, a move towards increased wage parity and social equity. However, as we transition to a $12 minimum wage, we must consider the diverse economic conditions across our state.

What Are the Alternatives?

We can never forget that labor is an essential part of our society. Like all other important things, it is affected by the economic laws of supply and demand.

The Legislature can better support low-wage workers by cutting red tape, reducing spending and sales tax, and endorsing education reform.

Free market capitalism has repeatedly proven to be the most effective way to reduce poverty and enhance prosperity overall.

Wage hikes hold the potential to stifle job growth, particularly among marginalized groups. As we strive to uplift low-wage workers, we must also consider alternative avenues for economic empowerment.

The minimum wage debate is emblematic of larger ideological divides regarding the role of government in economic affairs. While proponents argue for intervention to rectify market failures and promote social justice, we must caution against unintended consequences and the erosion of individual freedom.

As Nevada marches towards a $12 minimum wage, let us tread carefully, mindful of the lessons learned from our neighbors to the West. By embracing evidence-based policymaking, fostering dialogue across diverse stakeholder groups, and prioritizing the long-term prosperity of our state, we can forge a path forward that balances compassion with pragmatism, ensuring a brighter future for all Nevadans.

Sign up for Nevada Policy’s weekly emails to stay up to date on the most pressing issues facing Nevada.