California's New Minimum Wage Is Predictably Killing Food Delivery Jobs

Pizza Hut announced plans to lay off 1,200 delivery drivers on Wednesday.

A new California law will require that most food-service workers get paid at least $20 per hour starting next year.

But hundreds of pizza delivery drivers in the Los Angeles area are about to discover Thomas Sowell's famous adage that the true minimum wage is zero.

Pizza Hut announced Wednesday that it would lay off about 1,200 delivery drivers in Los Angeles, Orange, and Riverside counties, CBS News reported. Pizza Hut franchises are outsourcing delivery to third-party apps like GrubHub and UberEats as a cost-saving measure in advance of the new law taking effect.

The layoffs are likely to take effect in February, The Los Angeles Times reports, just weeks before the new, higher minimum wage hits.

California's minimum wage for all workers is already $15.50, one of the highest wage floors in the country. The new $20 per hour minimum wage applies to all employees of fast-food chains with at least 60 locations in the country.

Gov. Gavin Newsom signed the fast food worker minimum wage proposal into law in September. The law also created a new state board, the Fast Food Council, that will play a role in setting labor standards and future wage increases for many food-service jobs.

That the new wage mandate is already costing jobs should not be much of a surprise. Perhaps worse is the unseen costs in the form of jobs that will never exist in the first place. Like burger-flipping in a fast-food joint, pizza-delivery gigs are low-level employment opportunities for workers with low skills or those seeking a little extra cash. Hiking the minimum wage means some workers will earn more, but other people will effectively be priced out of the labor market.

"Labor costs account for one-third of fast-food costs, so prices will rise. McDonald's and Chipotle already have announced higher prices for next year," Reason contributor Steven Greenhut wrote last month. "For most of us, the higher prices will mean a little less pocket cash and a lot more home-cooked meals. But think about the lost opportunities for people who need them the most."

Comments

[Chumby]

Minimum wage should be $0.00/hour. Politicians during campaigns pay staff called “volunteers” this amount. Government should ensure that agreed to wages are paid but should not set a minimum number. You are worth what folks pay you. If you get a pay raise required by government, you aren’t worth much and are then being overpaid.

[Diane Reynolds (Paul.)]

Let's agree to disagree, and make it $20 an hour.

[Gaear Grimsrud]

Haw Haw. CA wins by .03. Suck it OR.

[Chumby]

You can tip those you feel are underlaid pr open a competitive option and pay your employees however high you’d like.

[Gaear Grimsrud]

"You can tip those you feel are underlaid". I think they're called incels.

[VULGAR MADMAN]

This sounds like the beginning of a rather derivative porno.

[Elmer Fudd the CHUD 2: Steampunk Boogaloo]

What about Morbidly Obese Jeffy?

[JesseAz]

Jeff is under laid.

[Chumby]

He’ll never get that big tip he’s seeking.

[Medulla Oblongata]

It's just the tip, though.

[JesseAz]

He seeks small tips. Low denominations.

[Medulla Oblongata]

They're just playing games. All people deserve $50/hour.

[JesseAz]

Ahem. $50 adjusted for 2x inflation.

[Nazi-Chipping Warlock]

"Do I hear $500? $500?"

[Thegreatone]

The problem with your argument is companies take advantage of the workers. The taxpayer makes up the difference between what they pay and the cost of living. Im sure many would work for your$.50 an hour but they can only do that with a welfare check coming in. The less they make the higher their welfare benefits. It's time to stop giving these companies free labor and make them pay the cost to feed and house their employees.

[Sevo]

"The problem with your argument is companies take advantage of the workers..."
The problem with 'argument' is that you are an ignorant pile of lefty shit who has no idea how businesses operate.
Fucck off; the adults are discussing matters.

[Truthfulness]

The problem with your argument is companies take advantage of the workers.

Companies offer workers a contract–just how is that taking advantage of them?

The taxpayer makes up the difference between what they pay and the cost of living.

Actually, that widens the difference. The more taxes, the greater the risk of not reaching the cost of living.

Im sure many would work for your$.50 an hour but they can only do that with a welfare check coming in.

That wasn’t the case 100 years ago. It’s not workers’ nor employers’ fault that the dollar was inflated.

The less they make the higher their welfare benefits.

So why have the incentive to make more if government is just gonna do it for them?

It’s time to stop giving these companies free labor and make them pay the cost to feed and house their employees.

No, it’s time to stop giving welfare workers free money out of someone else’s labor and instead make them work for their pay and pay for food and rent themselves. They are not entitled to any of that for free.

You’ve been deceived!

[Diane Reynolds (Paul.)]

Once again, Reason reports on an effect as if it's "unintended".

[TD]

You make a good point. It was obvious that the effect of raising the wage for fast food restaurants would increase prices causing some restaurants to lose business and close, cause other layoffs, and discourage people from wanting to open a new restaurant franchise. Add to this that the Dems have long hated the franchise business model. So, the layoffs are the result of intentional policy, and as restaurants close that will also be as intended. Likely the legislators are celebrating that these effects are happening so quickly.

[jimc5499]

When the initial push to raise the "minimum wage" started the Unions pushed to have their members be exempt. Has that changed?

The reason that the Democrats hate the franchise business model is that it insulated the franchiser from the franchisee. That means that the Trial lawyers can't access the deep pockets big money.

[damikesc]

I can buy this is unintended. Progressives seem to have no concept on the impact of their policy preferences.

People who supported this will soon wonder why their pizzas take so long to get to their houses these days.

[fuck libertarians]

the people who enacted this law specifically wanted people to be thrown out of work? to what end?? you truly are the dumbest poster on this site

[Sevo]

You're not real bright are you?
And you got (Paul) out imbeciled by very large amounts

[JesseAz]

Buy illegals mopeds so they can deliver for restaurants under the table.

[Nazi-Chipping Warlock]

It's gonna have to be a pretty small moped to fit under the tables.

[VULGAR MADMAN]

If you want to become a bigger alcoholic than sarcasmic, just go to the YouTube channel of a cali news station and read the comments.

[InsaneTrollLogic]

Sycophants?

[VULGAR MADMAN]

The usual “big business makes inflation because they hate poor people” stuff.

[Elmer Fudd the CHUD 2: Steampunk Boogaloo]

Yeah……. Martial law for CA is sounding better and better all the time.

[Homple]

This is great news for the UberEats and Grubhub entrepreneurs. They get a chance to compete with each other for more business and thereby make everybody richer.
"Ill blows the wind that profits nobody", as some guy once said.

[VULGAR MADMAN]

The left wants to end them though.

[damikesc]

Yeah. CA will eventually gut them as well.

[Naime Bond]

Do they vote? Most don't and if they do, they vote over and over to enslave themselves by voting people who give them San Francisco, open borders, cheap labor, etc. etc.

[InsaneTrollLogic]

California is fucking around. Something tells me they're about to find out.

[MWAocdoc]

"... outsourcing delivery to third-party apps like GrubHub and UberEats as a cost-saving measure ..."

Doesn't this kind of beg the question, "How do GrubHub and UberEats manage to stay in business when Pizza Hut can't pay delivery drivers the higher salary?"

[JesseAz]

No. Uber eats and grubhub deliver from multiple restaurants, not just one.

[JesseAz]

Should add they also pay on a delivery contractual basis. So down time without orders isn't considered employed time with those apps. Slow afternoon? Contractors aren't being paid. Pizza hut? They are paid during slow hours.

[Elmer Fudd the CHUD 2: Steampunk Boogaloo]

Drivers do side work in the kitchen when not on deliveries. They did just sit around.

[Elmer Fudd the CHUD 2: Steampunk Boogaloo]

‘Don’t’

They still haven’t fixed the edit button.

[Jefferson Paul]

I'm reading these comments a couple days behind, so I don't know if anyone will even see my comment...

I did deliveries for Dominos and Pizza Hut back in the day (over ten years ago). Dominos paid me below the minimum wage the entire time I was on the clock (since I was treated as a tipped employee). I still made well over min wage with tips. Pizza Hut, on the other hand, paid me the below-min wage amount when I was out of the store on deliveries, but bumped it up to minimum wage when I was in the store. Both companies expected the drivers to assist in the store when not out on deliveries.

I like the Pizza Hut model better, as that was them deciding to raise it to min wage in those instances, as company policy, not because they were forced to by law (and b/c I got a little more money).

Either way, there should be no minimum wage laws, which libertarians should be able to agree with for many reasons.

[MWAocdoc]

Thanks. I did not know that.

[Gaear Grimsrud]

Now that I'm retired I was considering doing some occasional work like delivering pizzas to help pay my property taxes. Looks like I may have to move on to plan B, selling fentanyl on a street corner. Government never fucks with those guys.

[CindyF]

It will be easy for California to resolve this problem. They will just pass a law that says pizza restaurants cannot fire pizza delivery guys. Easy, peasy!

If that causes additional problems, such as restaurants closing, they can just pass another law stating that once opened a pizza restaurant cannot close.

This governing business is so simple, even Newsom can do it!

[mad.casual]

When its discovered the ovens burn carbon, mandate electric ovens.

When no one wants a shitty driver from a mandatory-staffed pizza place that can't close for lack of business cooking with electric ovens that can't deliver in rolling brownouts and intermittently set other parts of the state on fire, mandate extra pizzas be baked during non-peak hours the delivery guys using their electric cars which charge during non-peak hours can deliver the pizzas straight to landfill during peak demand hours.

[AT]

Directive 10.289.

[TJJ2000]

Nothing kills an economy like a Democrat government.
FDR - The Great Depression
Obama - The Great Recession
Biden - The Great inflation

[darlene1waters]

All of those events were caused by conservative policies, and the Democrats you mention were largely responsible for the recovery from those events.

[Diarrheality]

All of those events were caused by conservative policies, and the Democrats you mention were largely responsible for the recovery from those events.

Yeah, I remember coming across that in chapter two of The Retarded Marxist's Big Book of Revisionist History and other Bullshit Tales. Now, fuck off, you illiterate hack.

[darlene1waters]

You first, you delusional conservatard who apparently hasn't yet recovered from being toilet-trained at gunpoint.

[Truthfulness]

darlene1waters, read this:
https://lawliberty.org/the-great-regulation-caused-the-great-recession/

If anyone else wants to refute this person, be my guest.

[arpiniant1]

DO you own a calendar or a history book?
Depression, 1929, 3 years before FDR
Great Recession, 2008 before Obama took office in 2009
Inflation, Gee actually happened under a Democrat, but growing up in the 1970's current levels of inflation do not bother me

[TJJ2000]

The single corrupt NYC bank run didn't launch the nation into the Great Depression. It was FDR and his [Na]tional So[zi]al[ism] pretending the national gov-guns could save it that started it.

Same with Obumer. But lets just *pretend* you make a point - your point is completely washed away of any actual standing because the leftards did nothing but made the situation worse and worse and worse.

[TJJ2000]

And in the blame-shifting game of leftards... All the compulsive and repeating BS from left-policy is all the rights fault.

Go on with your bad self and tell us how you excuse Biden dumping the economy on a half-term from Trump/conservatives while FDR/democrats managed to maintain a Great Depression for 12-F'En years.

Your leftard bigotry is the only thing you have to sit on.

[Iwanna Newname]

You will own/have nothing and be happy.

[VULGAR MADMAN]

The genius of the founders will be their undoing.

[TJJ2000]

How government - 'guns' delivers ?free? pizza for everyone.
Oh that's right; 'guns' don't deliver pizza so now no-one gets it delivered.

[Jerry B.]

You will eat your insect pizza and like it, even though it costs $50 for a medium.

[darlene1waters]

Those "low skills" certainly generate a lot of revenue, though, don't they? But for some reason our corporatist society allows the food service industry to flat-out refuse to pay their own costs of doing business. Tax payers are subsidizing the payroll costs of highly profitable mega corporations to the tune of tens of billions of dollars a year in public assistance that their workers need in order to pay their basic living expenses. When individuals refuse to use their income to pay their own bills and then get their income subsidized through public assistance that's welfare fraud.

[Chumby]

Except when government intervenes, customers determine the price of goods and services.

I agree that the government should stop subsidizing people’s lifestyles.

[darlene1waters]

Highly profitable corporations are getting their payroll costs subsidized by taxpayer money because they're hoarding revenue instead of using it to pay their payroll.
When individuals do the same thing by hoarding their income and misrepresenting how much they make so that they can get welfare, it's welfare fraud.
When corporations do it it's still fraud but it's legal for them.

[Nazi-Chipping Warlock]

Fuck off, commie.

[Michael Ejercito]

Who the fuck is this bitch? I do not recognize her name!

[darlene1waters]

I usually skip the comment threads of the brain-dead.

[Sevo]

You should skip them to avoid being called or you bullshit. lying pile of lefty shit.
Oh, and fuck off and die.

[jimc5499]

Wow, are you full of shit.

[TJJ2000]

Now tell us again who is always trying to subsidize everything?
It’s not called crony socialism for nothing.
P.S. Crony capitalism is an oxymoron invented by socialist deception.

[Sevo]

"Highly profitable corporations are getting their payroll costs subsidized by taxpayer money because they’re hoarding revenue instead of using it to pay their payroll."

If they were, the market would be pushing the stock to the ceiling. You are an econ-ignoramus, aren't you?

"When individuals do the same thing by hoarding their income and misrepresenting how much they make so that they can get welfare, it’s welfare fraud."
Yes.

"When corporations do it it’s still fraud but it’s legal for them."
Care to cite when and where that happens? Didn't think so, just one more lying lefty shit.

[Paper Wasp]

The workers apply for the jobs knowing what the rate of pay is, and accept the rates of pay offered when they take the job. The rates of pay for these jobs are low because they require no skills, and virtually any ambulatory person over 16 on Earth can perform the duties of the job.

There's no "welfare fraud" here. Workers also have three options to improve their pay, in short and long term, that they rarely opt to do:
1. They could simply not take jobs that pay too low to cover their household expenses. If enough of them did this, employers would raise their wages to entice workers.
2. They could learn more unique skills that make them more valuable in the labor marketplace.
3. They could limit the size of their families. Employers are able to pay cheap wages because there's a glut of Idiocracy extras. Stop breeding a massive pool of zero-skill drones and it'll be a workers market.

[darlene1waters]

The market has nothing to do with it. The demand is for each job to be a livelihood for a person. There is no corresponding supply, because corporations are taking the market out of the picture, by controlling all of the regulations that should be forcing them to participate in the market.

[Sevo]

"The market has nothing to do with it..."

You are obviously a steaming pile of lefty shit, and abysmally stupid besides.

[TJJ2000]

Crony Socialism once again.
Maybe it's time to LIMIT the gov-'guns' from regulating everything.

[Get To Da Chippah]

The demand is for each job to be a livelihood for a person.

Good lord. How many children do you think a person should be able to raise on minimum wage?

Entry level positions have never been intended to pay so much that people don't need to learn skills to qualify for better jobs that pay more.

[Paper Wasp]

“The demand is for each job to be a livelihood for a person.”

Dumbest thing I’ve read so far in 2024, congratulations.

Any of four billion people could walk in off the street and do these jobs. They could be trained up in half an hour or less. The jobs require no skills or experience. If you have no skills or experience, you’re delusional if you think your employer owes you the lifestyle of your choice. If you’re not willing to invest in yourself, your employer sure af doesn’t need to, either.

[jimc5499]

About six years ago I was laid off. I responded to an ad for a Mechanical Designer. I interviewed and was told that I was overqualified and that they would have to pay me too much. I told them that I was willing to work for the salary stated in the ad. They said no. Funny thing was that the salary in the ad was a nice raise from what I was making. Two days later I got the call from where I'm at now. Kind of glad the first place turned me down.

[soldiermedic76]

Moron, the corporations aren't paying the fucking wages. It's the small business owning franchises that pay the employees. So, this isn't going to hurt the corporations, just a bunch of small business owners. Fucking idiot.

[Get To Da Chippah]

Look, we all know that every Burger King franchise comes with a free money bin for the owner to fill with gold coins.

[TJJ2000]

So what's stopping anyone from starting a Burger King franchise?

[FivebySixThree]

government goes out of its way to punish the working poor through high licensing fees, tag fees, driver license costs, and more. lets not start on its effect on housing cost

[Paper Wasp]

The law also created a new state board, the Fast Food Council

See? No reason to worry about those poor pizza drivers. Every new law is first and foremost a jobs program!

[Truthteller1]

Democrats have the reasoning skills of a toddler. Let it burn.

[Truthteller1]

People are dying!!

[Get To Da Chippah]

Clearly California didn't think businesses were leaving fast enough.

[Doc Rab]

Gavin is the new Pizza Nazi: "No pizza for you!!"

[Thegreatone]

Why would Pizza hut have their own delivery? The others are much cheaper.

[TJJ2000]

Thanks to government regulations.

[Art Stone]

Because third-party drivers tend to pick up multiple orders from multiple locations and the pizza is cold by the time it arrives at the customer

[timsterp8899]

The SEIU union (government workers) pushed hard for the minimum wage increase because their collective bargaining agreements are indexed to the minimum wage. When it goes up, their wages increase commensurately. It's a great political payback by democrats to ensure that government workers will always vote deep state.

[TJJ2000]

They never consider worthless money is worthless. It's all but a gov-'gun' gang of armed-criminals that will eventually eat the USA to it's death because 'guns' don't make sh*t.

[Drichardson27]

As some of you note, the fast food industry model exploits low wage workers, keeps them part time to save on health insurance, and otherwise shaves every dollar to reap tremendous corporate profit and pay its CEO at last report a $14 million salary, high for the industry.
Forced to pay close to a livable wage to workers, they shave a function of the business that isn't as profitable or necessary -- delivery, especially since there are now companies who specialize in that.
It's not a liberal conspiracy requiring all the vitriol and trolling seen here. It's just business, and government regulating business for all ya'lls own good.

[TJJ2000]

B.S. If it was so easy why aren’t you in this fantasy land of business soaking everyone for a profit as you pretend??? What’s stopping you??? NOTHING!!!! You’re just so full of selfish arrogance you think gov-‘guns’ job is to go STEAL what you don’t want to EARN or RISK.

All you Democrats are the most selfish, greedy, criminally minded F’Jobs out there. You want to know why your life sucks so much and you can't pay the bills????????????

IT'S BECAUSE YOU ALL THINK STEALING IS PROGRESS.....
Never having enough of a brain to realize 'guns' don't make sh*t. So it's a zero-sum game that ends in poverty and despair.

You want something GO F'En EARN it.

[Sevo]

BTW, this is the whining of lefty shits totally ignorant of how business works. Example:

"...and otherwise shaves every dollar to reap tremendous corporate profit and pay its CEO at last report a $14 million salary, high for the industry..."

If shitbag were to make that claim honestly the asshole is missing several explanatory paragraphs, and given the content so far the slimy pile of lefty shit has no way of supplying that data.

Hey lefty shit Drichardson27, let's see a cite for you claim regarding CEO compensation, and further, how that affects stock-holders (who get the benefits).
Just spitballing here, but you are some pathetic piece of infantile lefty shit who is too stupid to have any sort of investments, right?
How do you think mommy and daddy are gonna support your worthless ass without some sort of return from investments which are a total and complete mystery to you?
Fuck off and die.

[Sevo]

"As some of you note, the fast food industry model exploits low wage workers, keeps them part time to save on health insurance, and otherwise shaves every dollar to reap tremendous corporate profit and pay its CEO at last report a $14 million salary, high for the industry..."

You are a steaming pile of lefty shit and abysmally stupid besides.
The adults are discussing the issue here; go away until you learn something.

[Roger Wilco]

I'm too poor to eat out anymore, so it's all moot for me.

[Left Unsaid]

This is just some political bluster and BS by a substandard pizza purveyor. Why kill your delivery business because you have to pony up a few extra bucks for someone doing a dog crap job nobody wants? They won’t. After a few weeks with NO business, they’re going to be begging these drivers to come back. It won’t matter to me anyway. No way I’d eat that garbage.

[Truthfulness]

If nobody wanted the job, no one would get hired. You didn’t think that out, did you?

But it’s really simple: higher expenses will increase the risk of a business going into the red, which is bad for everybody in the business.

Pizza Hut has stated they're going into cheaper measures like Grubhub to do their deliveries. You are not entitled to extra money.

[AT]

Why hire them back when they can get freelancers?

They should be more worried about the customers who won't pay more money for the same substandard pizza that hasn't been improved in any way.

[Sevo]

"This is just some political bluster and BS by a substandard pizza purveyor..."

If econ is a total mystery to you, pull some lame whining out of your ass and post it, as this steaming pile of lefty shit did.
Fuck off and die, asshole.

[arpiniant1]

Why is math so hard for bobbleheads
increase of 5 bucks in an 8 hour shift
HOw many deliveries[at what value] are made in an 8 hour shift
What impact does that have on price of that delivered meal
I would have to say it probably falls in noticeable but not significant

[Jefferson Paul]

Why are you lefties so ignorant of economics? First, it's an increase of 5 bucks per hour, not over total 8 hour shift. Then you need to extrapolate that extra expense to every driver. Then multiply by how many stores the business owns.

Do you think businesses just have unlimited profits that they can then dip into to do this? Do you know what the average profit margin is for a fast food restaurant?

Do you realize that what Pizza Hut pays it's drivers has to compete with what Dominos, Papa Johns, and others pay? Let's say Pizza Hut only wants to pay it's drivers $1 an hour (ignore the min wage laws for the sake of this illustration). Dominos would want to draw away the best and even serviceable drivers from them and offer $2 an hour. Now Pizza Hut can't get anyone willing to work for the $1/hour rate, so they will have to raise it to $3/hr. Now Papa Johns can't get drivers, so they raise it to $4/hr. This keeps happening until you get to a market rate: let's say $15/hr. Businesses will raise pay to get the best workers, until they can't, since it would make them unprofitable (the whole point of a business is to be profitable). So they will try to maximize efficiency and cut costs in a model that will allow them to get the best possible workforce (in order to increase profits) while maximizing profits, market share, etc. That's how you get innovations.

Companies have to compete for the best, most efficient workers. Workers compete for the best pay and benefits. Each is a market on its own. This is what Henry Ford did over a century ago. He wanted to siphon off the best workers from other companies, so he offered a 5-day work week. He could do it b/c he had built up his infrastructure to be more efficient. He didn't offer it because he was a kind man who cared about the workers. He knew that if he got better workers, it was worth it because it would allow him an edge over his competitors, increasing profits.

The top-down approach you lefties seem to want makes it seem you have no understanding of how to run a business or how economies work. But that doesn't stop you from being arrogant and uninformed at the same time.

[Richard Bees]

Once again, California’s governor, American Psycho, proves he’s the savior of the little guy who’s just scraping by. Of course, $20/hour doesn’t do you any good once you’re unemployed. That’s just collateral damage.

In other news, Newsom has declared one foot to equal 13 inches. Long live the King!!