Tuesday saw the passage of legislation by California’s legislators creating a council with the authority to increase the minimum wage for fast food at specific establishments.
AB 257, which Governor Gavin Newsom (D-CA) is anticipated to sign, establishes a “Fast Food Council” tasked with formulating “sectorwide basic requirements on pay, working time, and other working conditions.”
The legislation, which has the support of the influential Service Employees International Union, only applies to eateries with 100 or more locations across the country, with the exception of those who run bakeries that “make for sale bread as a stand-alone item on the menu.”
The $15.50 minimum wage set to go into effect next year can be increased by councilmembers to a maximum of $22 per hour, a rise of more than 40%.
The law was introduced a year after a significant number of California eateries were compelled to close due to severe government lockdowns. McDonald’s USA President Joe Erlinger criticized the law in a letter, saying that it imposes “greater costs on one type of business, while sparing others.”
“You can be targeted by the law if you are a small company owner running two stores that are a part of a large chain, like McDonald’s,” Erlinger said. “However, if you operate 20 independent eateries, the law does not apply to you.”
Erlinger proposed “backroom politicking” as an explanation for the carveout for eateries with bakeries. He said, “This is a clear example of government choosing ‘winners’ and ‘losers,’ which is not its proper function.”
According to a study by the California Department of Finance, the act “increases long-term costs across businesses” by introducing a “fragmented regulatory and legal environment for employers.” According to the company’s most recent federal filings, there will be over 40,000 McDonald’s locations by 2021, with 93% of those being franchisees.
Erlinger remarked of the legislation: “This should send alarm bells ringing throughout the nation.” But this story isn’t simply meant to serve as a warning to California’s consumers, employees, and company owners. Regardless if Governor Newsom puts the legislation into law, the bill’s supporters have made it clear they want it to be implemented nationwide. Oh no, that would be awful.
In recent years, California has introduced a number of onerous labor rules. In 2019, Newsom signed off on AB 5, a piece of legislation that argued that classifying people as independent contractors rather than employees leads to their “exploitation.” The Supreme Court recently declined to consider the case, which caused the end of the stay and prompted independently employed truckers to shut down major ports in protest. Despite a California court has granted Uber and Lyft an emergency stay in 2020 over a legal case that would have compelled the companies to comply with the law.
The California Air Resources Board recently released new regulations mandating 35% of new cars to emit zero emissions by 2026. This threshold will increase to a 68% benchmark by 2030 and a 100% level by 2035. Days afterwards, the new minimum wage law was also passed. Researchers have cautioned that the state’s electric grid will need significant upgrades to handle a quick switch away from internal combustion vehicles. The California Independent System Operator has this week advised residents to avoid charging their electric vehicles in order to avoid overloading the grid, reflecting this reality.