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The Employment Effects Of Minimum Wage On Fast Food And Youth

1229 words - 5 pages

Recently, the hottest topic of the minimum wage issue became hotter. Much news online and people spend hours on TV shows to explain what will be affected by the increase of minimum wage. A local newspaper wrote that the new bill passed by the Legislature suggests that the Minimum wage in California will be $10 an hour by 2016, making the state become the first of the country to commit to such a high minimum wage. Governor Jerry Brown had signed a bill to bring up the minimum wage in California for those hourly workers in the most crowded and busiest United States’ state from the current amount of $8 per hour to $9 per hour in July 2014 and eventually to $10 by January 2016. In a newspaper ...view middle of the document...

In this paper, I will analysis the effects on both fast food industries and youth generation when minimum wage above the federal wage.
When minimum wage is increasing, according to David and Alan’s research, they found out even though the previous studies in 1970s, “based on the total teenage employment rates confirmed that a rise in a minimum wage will lead profit maximizing employers to cut employment”, however they also believes that “according to the recently studies that rely on a similar comparative methodology have failed to detect any negative employment effects of higher minimum wages and of an earlier increase in the minimum wage ,” they found no amount of employment be affected. In addition to that they also indicated that, “a study of minimum wage floors in Britain reaches a similar conclusion.” (David, Alan, 1993) They analyses the experiences of 410 fast food restaurants in both New Jersey and Pennsylvania following the increase of New Jersey’s minimum wage by 80 cents per an hour. They concluded that they “found there was no evidence that the rise in New Jersey’s minimum wage reduced employment at fast food restaurants in the state.” They also indicated that the increase in the minimum wage slightly increased employment. They actually presented a wide variety of alternative specifications to argue with their own predictions. None of the alternatives shows negative employment affections. In addition, they believed that some rumor said that the increase of minimum wages will reduce the number of fast food outlets opened in a state is also wrong. By doing research, Alan and David suggested that the increase of minimum wage will affect the price of fast food meal goes up, since the burden of the minimum wage is higher and most of the pressure were passed on to consumers. That means, the fast food industry will not reduce the stores or the number of workers but may increase the meal price in order to share the high fixed cost and keep making higher profit.
On the other hand, another group of people believes that states with minimum wages above the federal level have sometimes implemented exemptions from the higher state level for specific subgroups of the labor force, such as teenagers or students. According to William and David, based on their research on District of Columbia and Minnesota, by using a specially constructed panel data set on state minimum wage laws and labor market conditions, they found new evidence on effects of minimum wages on employment of teenagers and young adults, and assessed the extent to which youth or student subminimum...

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