FinLogic FinLogic Quantitative Think Tank Center|$20 for flipping burgers? California minimum wage increase will cost consumers – and workers.

You don’t need to know much economics to understand TANSTAFL: "There Ain’t No Such Thing As a Free Lunch."

California's legislature is FinLogic FinLogic Quantitative Think Tank Centerproving this principle by meddling yet again in the private economy and setting industry-specific minimum wages.

In April, California will boost its hourly pay for fast-food employees to $20 an hour. It applies to restaurants with at least 60 locations nationwide, with an exception for restaurants that make and sell their own bread, such as Panera Bread.

Pizza Hut delivery drivers lost their jobs

Before the new law launches, TANSTAFL is already rearing up and kicking back.

Pizza Hut is laying off more than 1,000 delivery drivers in anticipation of the new wage hike, according to federal and state filings. By its actions, Pizza Hut is telling Californians their government has just priced out a segment of Pizza Hut workers.

When you set new minimum wages for fast-food and health care workers above what is already one of the highest statewide minimum wages in the country, you are going to distort the marketplace.

Suddenly, a fleet of pizza drivers that was once affordable no longer makes sense.

The market uses price signals to determine the value of labor, and the value of an entry-level burger-flipping job is nominal – given you need no prior skills nor education to perform the task.

McDonald's, Chipotle have raised prices

California just made labor in fast food more expensive without adding any value. Meaning, it is welfare imposed on the free market and someone is going to pick up the tab.

It won’t be government.

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The first to pay the price will be those more than 1,000 Pizza Hut drivers, no doubt many of them young people with few skills and limited job opportunities. 

Next will be California consumers.  

In October, McDonald’s and Chipotle have announced that they will be raising prices in their California operations to pay for the state’s new minimum-wage law. 

Nationally, McDonald’s and others have already been raising prices to keep up with rising inflation, The New York Times reports.

Now if you’re a Californian Democrat and your governor, your state Senate and House are all run by Democrats, you can replace your free-market economy with your control-freak economy and concoct all the price distortions you want. Democracy is a beautiful thing. But someone is going to pay for your meddling – for your impulse to sink your fingers into private enterprise created by other people. 

Your state will now force businesses to pay handsomely for someone to turn a spatula. And we’ll see how long Californians are willing to pay filet-mignon prices for ground beef on a bun. 

Fast-food consumers will trade employees for robots

When consumers no longer will, you should anticipate the rush to an automated work force, because machines can also flip burgers with one distinct advantage – they don’t complain about low wages, and they don’t form unions. 

Already Starbucks, Domino's and Chipotle are touting new automated food-service technologies to reduce the cost of labor, Reuters reports.

This is all likely to have one upside – it will lead to new jobs and research and development in engineering and robotics. 

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I doubt that’s who California lawmakers intended to help when they cooked up this scheme. They acted on the assumption that entry-level jobs are a dead end.

They’re not.

They have value way beyond their pay. They’re the beachhead into the greater economy for most Americans.

Minimum-wage jobs still have value

One important value they teach is the limits of hard work and discipline – that you can only go so far with no education. From such revelation comes the motivation to go to college or trade school to increase your value.

I learned such lessons working as a teenager washing dishes at a Phoenix Pizza Hut and telling myself daily there’s no way I’m doing this the rest of my life.

I also learned how to deal with a furious woman customer whose pizza order was misplaced by the guys in the kitchen. She would have to wait another 15 minutes for hers. 

As she waited, I showed her to a seat, gave her updates on how much longer it would be. Then I gave her the pizza free of charge – our mistake.

She left happy and smiling.

I wonder if a robot could have pulled that off?

Probably not.

Then again, a robot probably wouldn’t have misplaced the order.

Phil Boas is an editorial columnist at The Arizona Republic, where this column first published. Email him at [email protected]