California to raise minimum wage

On Monday, California Governor Jerry Brown and state lawmakers reached an agreement to raise the state’s minimum wage to $15 an hour by 2022. California’s current minimum wage of $10 per hour is already one of the highest in the United States.

William Blair opines:

Commodity costs are favorable, particularly for proteins (beef, poultry, seafood), wheat, and dairy, while energy costs (natural gas and electric) are also quite low. As a result, commodity trends have been firmly in deflationary territory since March 2015, marking the first inflection into sustained deflationary trends since late 2009. However, escalating labor costs are largely offsetting the benefit of low commodity costs, reflecting both a tight labor market and government-mandated minimum wage increases on the West Coast, in the Northeast, and in certain major cities. As a result, labor inflation appears to have ticked up again so far in 2016, largely outpacing price increases.

 

On a conference call, Bill Long – Noodles & Company – VP, Finance in response to a question about inflation, stated:

Yes. Certainly more of the inflationary pressures are in labor for us. Similar to what the rest of the industry’s seeing, we’re upwards of 5% wage inflation on the labor line right now. We’ve been seeing that pretty consistently for several months. We do expect that to continue. It’s a combination of both minimum wage but also just more competitive pressures in the hiring environment, very similar to what other concepts are seeing right now.

We’re constantly exploring opportunities around deployment and how we can potentially be a little bit smarter about where we use our labor dollars. We feel good about where that stands right now but we’re constantly pursuing opportunities there because of what we’re seeing in the inflationary environment.

See the following visualizations which highlight relevant figures regarding the minimum wage in the United States.

CA to Raise minimum wage – a look by State

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Minimum Wage Workers in the United States

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Ethnicity and Gender of Minimum Wage Workers

 

Educational Attainment of Minimum Wage Workers

 

Federal Minimum Wage Over Time

 

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Raise minimum wage