There is a remarkable study of sectoral minimum wages in California. It deals with minimum wages that have been raised set to start from a floor of $20 per hour in the fast food sector. The first indications after 6 months show that the wage increases due to the regional and sectoral minimum wage in California were about 18% per hour. The wage rises did not have a negative effect on employment so far and are not expected to happen. The first indications suggest that price rises absorbed 2/3 of the wage increases. Consumers of the fast food chains and on special event locations do not react strongly on the price increases to reduce demand. As overall the turnover achieved in the restaurants increased even franchising chains were able to increase their profits. It is an interesting example that an increase in minimum wages can create a win-win-win situation starting with a substantial pay rise. A second round effect not mentioned in the study could consist in the narrowing of the price differential between healthy food and fast food. The option of a healthy meal might no longer appear to be so much more expensive.
