California never fails to shoot for the stars, no matter how unsustainable an action may be or how much it hurts its residents. California has chosen to chase businesses, specifically fast food restaurants, out of the state by increasing the minimum wage to levels they cannot, or will not, pay their workers.
The federal minimum wage requirement is $7.25 an hour, although most states create their minimum wage tables and keep it a more livable $11 to $15 an hour. While many states settled into new minimum wage hikes of just a few dollars, California went all-out and decided $20 an hour was the magic number to flip burgers and bag fries.
California’s $20 minimum wage hike has a catch. It’s only for fast food and healthcare workers. The rest of the workforce will see a raise to $16 an hour.
Amid a state budget deficit and rising issues such as crime, homelessness, and drug abuse, lawmakers are advocating for their progressive policies. Businesses in California can’t close their doors and escape fast enough; streets of once respectable cities are littered with trash, feces, and people experiencing homelessness. San Fransisco had to scrap its highly “anticipated” multi-billion dollar reparations plans because the city, much like California itself, is flat broke.
One could be forgiven for thinking that Governor Gavin Newsom would take a break from overseeing the collapse of his state. But for Newsom, the choice was easy. In September, he signed AB 1228, raising the minimum wage to $20 for Californians working at fast-food restaurants and some healthcare facilities. It was a move that would drum up voters for a governor losing control of his state faster than a Prius driver hitting a patch of ice.
The minimum wage hike is being greeted with enthusiasm by the paper hat crowds flipping burgers at fast food restaurant chains but less so by consumers and the restaurants themselves. Predictably, businesses are passing the added costs on to their customers. Sacramento attorney Alden Parker explained, “Menu prices will have to increase, so it will hit the consumer almost immediately.”
Some big chains, like Chipotle and McDonald’s, have already announced their plans to raise prices in the upcoming year.
The move will also affect smaller, family-owned restaurants. It’s anticipated that staff will quit working for neighborhood businesses and run to work for chain restaurants for pay bumps that smaller restaurants can’t offer. As a result, staffing shortages are expected to hit family-operated restaurants particularly hard.
California hopes that the new minimum wage for fast-food workers will cause wages to go up for other restaurant and food industry employees. With a shortage of workers in the industry and the stress it puts on existing staff, other food-service companies could increase wages to retain workers in a now highly competitive job market.
If they can afford it.
Fast food franchise owners are feeling the pain as well. Keith Miller, who owns three Subway sandwich shops, opposed the wage hike. This law was supported by major fast-food chains, who got assurances that unions would drop an initiative holding chains responsible for their franchises’ labor violations.
In other words, pay workers more and abuse them at will.
Miller points out that while big franchisors like McDonald’s escape responsibility, small business owners like him will have to deal with the higher wage costs. He also predicts that retail will suffer staffing shortages because workers will seek employment at fast-food restaurants to earn higher wages. According to Miller, this law could set a new, unofficial minimum wage for all workers at around $20.
It didn’t take long for business to rebel. Pizza Huts throughout California are cutting their delivery services, as are their rivals, Southern California Pizza Company. As a result, more than 2000 delivery drivers will lose their jobs.
To sidestep wage increases, big companies are actively working to replace human workers. Some have opted for smaller or seat-less restaurant designs, while others are investing in automated systems to oversee tasks traditionally done by humans, including taking orders and cooking burgers.
Meanwhile, the wage increase for healthcare workers is expected to cost $4 billion in the first year, funded by the nearly bankrupt state and federal funding.
California’s fast food workers may be celebrating, but the wage increase will leave many consumers hungry for the good old days of affordable fast food.