California's New $20 Minimum Wage For Fast-Food Workers Gets Slammed
News stories of higher prices, job losses, secret negotiations and a new ad poking fun at the California's new minimum-wage law abound.
With already the highest unemployment in the country, California’s new minimum wage law for fast-food workers, which establishes a $20 minimum wage and a “fast-food council,” goes into effect today, ironically, on April Fool’s Day has been getting slammed by pundits across the country.
The bill to raise the minimum wage for California’s fast-food workers, which was passed by California’s union-dominated legislature at the behest of the Service Employees International Union (SEIU) and other union groups was signed into law in 2022, but was delayed for nearly two years as a compromise was struck.
However, even before the rise in wages took effect, problems with the new law have emerged.
Price hikes and job losses…already?
Even before Monday, some fast-food chains began looking at hiking prices for their customers.
“Though Chipotle has not yet announced a final decision on new pricing, many other chains, such as McDonald’s, Starbucks and Jack in the Box, say they are also planning to push that increase onto consumers or change their operations,” the L.A. Times reported on Monday.
In addition, in preparation for the new wage hikes, Pizza Hut announced it would be laying off 1100 drivers last December.
“The layoffs are expected to go into effect as soon as February, just weeks before the state’s $20 minimum wage for fast-food workers is set to go into effect,” reported the L.A. Times.
In addition to the driver layoffs, other workers have already begun to lose hours and jobs as restaurants prepare to adjust their labor costs, the Wall Street Journal reported last week.
“California restaurants, particularly pizza joints, have outlined plans to cut hundreds of jobs in the months leading up to the April 1 wage mandate, according to state records,” the Journal reported. “Other operators said they have halted hiring or are scaling back workers’ hours.”
ExemptionGate
In February, the California Globe reported that “California Governor Gavin Newsom exempted a billionaire buddy from California’s new $20 minimum wage law.”
Newsom’s “buddy,” the Globe reported, was billionaire Greg Flynn, who “owns more than two dozen Panera Bread locations in California, as well as Applebee’s, Pizza Hut, Taco Bell, and Wendy’s.”
The Globe later explained that:
The exemption was written to the Panera Bread business model: A business operating a bakery and selling bread as a standalone menu item since September 2023, was exempted from AB 1228. Greg Flynn owns more than two dozen Panera Bread locations in California. And in addition of being a high school chum, Flynn contributed at least $164,800 to Newsom’s political campaigns, we learned.
Like the disastrous bill Assembly Bill (AB) 5, which foisted the career-killing ‘ABC Test’ on California’s independent contractors, the FAST Act (AB 1228) has also been met with so much criticism that California’s legislature passed a so-called “clean up” bill (AB 610).
The clean-up bill, according to the Globe, is an “admission that California’s arbitrary minimum wage laws hurt all businesses, but especially small to medium sized businesses.”
KCRA noted that passage of the clean-up bill ”is the result of the Service Employees International Union (SEIU) use of non-disclosure agreements in the final negotiations of the fast-food labor law.” Governor Newsom signed the clean-up bill last week.
Confusion persists
Even as the new $20 minimum wage takes effect today, many are still confused by who it applies to…and who it doesn’t apply to.
"It's upsetting that someone can write a law like this, hand it over to unions, and walk away from it," ice cream shop own Gaby Campbell told KCRA last week. "I just don't even understand how that's legal."
“Say you work at a fast food restaurant or coffee shop that bears the name of a national chain. Under California law, you’re entitled to be paid at least $20 an hour starting Monday,” the East Bay Times told its readers on Monday.
However, the East Bay Times went on to say, ”say you work at one of those stores, inside a grocery store. The grocery store, your employer, is exempt under the law. You’ll keep getting your current wages.”
Poking fun at the new law
Due to the uncertainty of the new minimum wage’s impact, the Center for Union Facts (CUF) released a new ad highlighting the “devastating impacts” of California’s new $20 minimum wage for fast food workers.
The tongue-in-cheek video features fast food workers “thanking” the Service Employees International Union (SEIU) for the damaging and inconsistent law, leading to higher prices, business closures, and layoffs, according to a CUF release.
“In fact, California restaurants are already killing jobs and cutting hours ahead of the increase,” CUF stated.
The ad will run in the coming days as a television and digital ad buy in the Los Angeles and Sacramento markets.
Though it is too early to tell what the long-term impact of the new $20 minimum wage will be, while it may help some fast-food workers, the harm to others should not be ignored either.