For eight years, Michael Ojeda delivered food for a Pizza Hut in Ontario, California, using the income he received to support his family.
In December, the 29-year-old received a letter from the pizza franchise informing him that his employment was being terminated in February. The news shook him.
Ojeda appears to be just one of the thousands of casualties of a new California law that will raise the minimum wage for fast-food workers to $20 an hour on April 1 for all restaurant chains that have at least 60 locations nationally.
Making $20 instead of $15 sounds like a win, but economics shows there’s no such thing as a free lunch. California lawmakers just proved it.
When the minimum wage goes up, the money to pay workers must come from somewhere, and it typically comes from three places: higher consumer prices, reduced labor costs in other areas (fewer workers, fewer hours, reduced benefits, etc.), and lower profits and capital expenditures.