When starting/growing a business management needs to decide how much of the pie to allocate to capital (equipment, etc.) and how much to labor. If labor is cheap, there's little incentive to invest in capital. Witness, for example, the building of the Union Pacific railway. I'm sure we've all seen the photos of the swarms of chinese labor they used to do it. Do you see that today? Hell no. Now, they have a great big machine that does it faster, safer, and cheaper. It cost millions, but it's still a better use of the money.
As labor becomes more expensive, businesses naturally invest more in capital goods to perform the work. One of my staff was relating to me just yesterday his experience with the AI-based auto-attendant at the Carl's Jr ordering window. He said it worked really good; it was pleasant, effective, and didn't forget the upsell. We mused that soon they'll take your money via a kiosk and the food will slide out of the service window on an automated conveyor belt. It's probably happening already. Also, there's Flippy, from
Miso Robotics. Many more Flippies are in our future.
The recent changes to the minimum wage here in CA have already started to bite. The two largest Pizza Hut franchisees in the state have
laid off 2000 delivery drivers because of it. Maybe they'll go to work for DoorDash, who knows? We're already hearing of other restaurants cutting back on expansion plans here.
And though the law "only" applies to large franchise restaurants, of course that's ridiculous, because restaurants (in fact, all businesses) are competing for the same labor. So it's going to raise costs for every business, and the smaller, less-capitalized ones will probably not be able to compete as their larger competitors invest in capital-based solutions to replace thier more expensive labor. Ultimately, they'll go under.
Meanwhile, economic activity in CA declines because nobody can afford anything in this state any longer, so the virtual signallers in Sacramento raise taxes to pay for all of the ridiculous programs they spun up with temporary COVID cash, causing more people to leave, further decreasing economic activity, resulting in more tax hikes... you see where this is going.
I've lived here for 44 years now; basically all of my adult life. It's been sad to watch, really. In part because of policies like this (and many, many, many others) California's transition from "The Golden State" to "The Golden Shower State" will not only continue, but accelerate. If only the weather weren't so stinkin' good, and the ocean so magical.