California Restaurants Closing, Laying Off as Minimum Wage Increases | John Kabatech

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California Restaurants Scale Back After Minimum Wage Hike
0:00 - New $20 Minimum Wage Hike Causes CA Restaurants to Scale Back
1:37 - How Increased Minimum Wage Affects Other Workers and Sectors
3:16 - Rebuttal to Common Assumptions Around Minimum Wage
6:06 - Who’s the Winner?

In a recent interview, John Kabatech, Director at the National Federation of Independent Business, discussed the challenges facing small businesses and workers as a result of increasing statewide minimum wage rates.

Mr. Kabatech cited examples from franchises in California that have been forced to lay off employees and close locations due to the new $20 per hour minimum wage, which took effect in April 2024. He noted that while the goal of minimum wage increases is to help low-income workers, the reality is that many small business owners struggle to afford higher operational costs without cuts to staffing, benefits or business quality.

Research was cited showing that most minimum wage earners are teenagers living with their families, not primary breadwinners, calling into question claims that increases are necessary to lift people out of poverty. Mr. Kabatech also pointed to a study from a Federal Reserve economist finding no evidence that minimum wages successfully reduce poverty levels.

Small business owners interviewed expressed difficulty retaining qualified employees and competing against larger companies able to absorb wage hikes. One restaurant in West Hollywood was forced to downsize from 50 to 30 employees after a $19 minimum took effect, and ultimately closed its doors, demonstrating real world impacts.

Automation was another trend highlighted as businesses automate roles formerly held by humans to avoid wage and regulatory compliance costs. While the goal of living wages is admirable, unintended consequences like job losses must be considered, according to Mr. Kabatech.

*Views expressed in this video/article are opinions of the author and do not necessarily reflect the views of California Insider.