Firms respond to minimum wage hikes in multiple ways.
One study considers a 2023 California bill that raised the minimum wage for fast food workers from $16 to $20 per hour.
The researchers estimated
a 4.9–5.1 percent increase in fast-food prices and a 2.1–2.2 percent increase in full-service prices. … Additionally, [the] findings suggest that price increases reduced consumers’ demand for fast food by 3.9–4.1 percent and for full-service meals by 1.7–1.8 percent.
Further, the wage hike had
distributional implications, as lower-income households spend a larger share of their budgets at fast-food restaurants.
All in all,
this large, sector-specific minimum wage increase raised labor costs, [which] firms passed … through to consumers by raising prices, and the resulting decline in demand reduced employment.
Exactly what standard economics would predict.
Simple example of the seen and the unseen. Oh, says some; wages in this or that area too low and must do something about. And yet never think through the consequences of what a wage increase means and more importantly perhaps is a lack of understanding of how wages are determined to begin with. Do all think biz owners wish to underpay employees and moreover, what about non wage compensation such as paid time off, etc.? Another case of ignorance not being bliss.