Thursday, April 04, 2024

Like AB5, CA's Fast-Food Minimum Wage Hike Results in Layoffs, Closures, and Higher Prices

By Jennifer Oliver O'Connell | RedState.Com

AP Photo/Ted Shaffrey, File

It seems apropos that April Fool's Day began the start of a $20.00 minimum wage for California fast food workers. AB1228 or the FAST Act (Fast Food Accountability and Standards Recovery Act) was signed by Governor Gavin Newsom in September 2023 and scheduled to take effect in April of 2024. Despite the warnings from economists, franchisors, and anyone with a brain, Newsom and the Service Employees International Union (SEIU) plowed ahead, claiming this was a victory for workers who could now earn a "living wage." 

It certainly wasn't a victory for the consumer. First, the prices of fast food started to tick up, then Pizza Hut drivers were laid off. The FAST Act is now fully in effect, and so are the unintended consequences. Tuesday, April 2 saw reports of fast-food restaurants cutting hours, laying off workers, and some completely shuttering their businesses.

Welcome to California, where a Big Mac combo will cost you $25.00 and be served to you by a robot. Stevie Wonder could have seen this coming; but hey, power to the people, and all that[Editor's note: Formatting is original to the source.]

This result shouldn't surprise anyone.  Inflation has driven up operational costs for businesses across the US and shrunk profit margins for major food chains in the past few years.  This has led to higher menu prices (like the "$18 Big Mac") and slowing sales for every major fast food company.  Another anchor dragging on the restaurant business in many regions was at least two years of covid stimulus coupled with rent moratoriums, creating aggressive labor shortages and raising wages in upwards of $16 per hour for brand new no-skill employees.

Small chains and mom-and-pop businesses simply can't compete.  Larger chains raised prices but have also been forced to reduce employees and labor costs through automation, but the layoffs are just getting started. 

Enter California's "FAST Recovery Act" passed into law in 2022 and going into effect in April of this year - The legislation requires a particular set of food chains dealing in certain kinds of products outlined in the law to raise their minimum wages (already at $16 an hour on average) to $20 an hour.  The income increase is limited to chains that have 60 or more locations in the state of California (meaning, the combined number of locations regardless of who owns them must be higher than 60)  Keep in mind that while many of these chains are associated with international corporations, they are owned and run by franchisees; they are still family run businesses.

Mass layoffs are now a guarantee with many restaurants already firing thousands of workers as well as some chains closing multiple locations because the cost of operation will be higher than the benefits.

 On Monday, employees at a Foster's Freeze in Lemoore, CA, went to work and discovered that instead of a pay increase, they were receiving their final check.

The assistant general manager, Monica Navarro, said her former boss called her on Monday and told her that the locks were being changed. Navarro thought it was an April Fool's joke. Sadly, the joke was on her.

"I was so caught off guard. We had no type of notice, no type of warning either. I mean the owner had told me Happy Easter," she said.

And she wasn't the only one.

"We had gotten a text in the group chat that we were shutting down, and I completely thought it was an April Fools joke," said former employee Jason Boado.

After learning it was real, she drove to the restaurant on Hanford Armona Rd, where the owner was handing out final paychecks.

 A shining example of why "at will" employment is absolute garbage. And the American Dream of owning and building your own business suffered another death in the San Fernando Valley. The owners of Shanghai Bistro in Woodland Hills decided that now was a good time to retire.

Hi everyone,

After more than twenty years and three versions of the restaurant in service of the Valley and nearby communities, Bruce and Debbie have decided to retire.

Our journey begun in the early 2000s with the first version of Lotus Inn in Agoura Hills, and later the second Lotus Inn on Ventura Blvd, and finally the Shanghai Bistro. It has been a pleasure and honor serving everyone great Chinese food, and in exchange, your love of our food have allowed us to watch our kids grow up in the restaurant, go off to college, and start families of their own.

We are also grateful for your continued support during and after the pandemic, a difficult time for us all. We were honored to be able to do our shares in contributing to the local medical service workers during that time as well.

Starting this restaurant, being a part of this community, seeing the joy on your faces when tasting our orange chicken, was the American dream for us. We could not have asked for a better twenty something years, and we look forward to the next stage of our lives in retirement.

Sincerely yours,

Bruce and Debbie

 Add this former restaurant to the list of other boarded-up businesses on Ventura Boulevard. Between regulations, California crime, and now this new minimum-wage hike, these businesses are opting to shutter their doors, and it is doubtful they will ever return. At 5.3 percent, California has the highest unemployment rate in the nation—expect that number to increase with the layoffs and closures as a result of the FAST Act.

California's unemployment rate is now the highest in the country, reaching 5.3% in February following new data that revealed job growth in the nation's most populous state was much lower last year than previously thought.

California lost a staggering 2.7 million jobs at the start of the coronavirus pandemic, losses brought on by Gov. Gavin Newsom's stay-at-home order, which forced many businesses to close.

Legacy media always chooses to ignore AB5, the anti-independent contractor law that took effect in 2020, just before the pandemic. AB5 affected 600 professions, and upended the lives of 4.5 million independent professionals throughout the state. Four years and many lawsuits later, an independent study done by the Mercatus Center shows that AB5 not only reduced the level of self-employment, but it also reduced overall employment, killing W-2 and independent work across the state.

Stupid leftists like Lorena Gonzalez (now minus the "Fletcher,") are cheering over this minimum-wage hike as if it is some victory for the people who do the work. As the head of Cal Labor, the Frankenstein creator of AB5 is still strong on unions, weak on economics, and wreaking havoc in the lives of Californians who simply want to pay their rent and feed their families.

No, Lorena, thanks to you and your ilk the average fast-food worker is now on the unemployment line. Mary Kay Henry, the international head of SEIU who started this with the "Fight for $15" campaign many years ago, is now basking in the fruit of her work and patting herself on the back for all she has done for workers.

Which goes to show that this supposed fight for the rights of workers has little to do with the people who work for a living. Whether it is AB5, the FAST Act, or any other policy or legislation advocated by Big Labor and their willing enablers in the California legislature, working people are the ones who get the short end of the stick.

If workers didn't know it then, they know it now. Apparently, the press was asked not to attend a rally to celebrate the minimum wage hike scheduled for Wednesday at the California State Capitol.

This event is expected to have low worker turnout and is in fact not being advised to press for coverage. Please ignore the advisory that was sent before. Apologies for the inconvenience.

 No doubt these workers are trying to hold on to the little hours they still have or are too busy looking for new work. 

Good job, California.