California Price Fixing Minimum Wage Hurts the Young and the Poor

“Workers need a living wage,” is California Gov. Gavin Newsom’s stubborn justification for signing the $20 per hour fast-food minimum wage bill into law. “We saw the inequities….We had a responsibility to do more.”

Math is hard.

Never once has Newsom accepted responsibility for the policies behind California’s ridiculously high cost of living.

Nor does Newsom acknowledge that in California – once known as the land of opportunity – $20 per hour only serves to create a permanent poverty class, which surely must be his end goal?

“The ones who remain employed will receive higher wage rates, but fewer will be employed.” This is a fact, well-proven in fact, by late economist Milton Friedman.

Instead of acknowledging that by signing the minimum wage laws, Newsom will cause owners of fast food businesses more hardship. It already has.

Instead, the governor sent his office minions to harass media outlets including the Globe, who reported on the fast food job losses and business closures. The harassment continues on social media and in emails.

In June, the Globe reported that Rubio’s Coastal Grill, a Carlsbad-based Mexican food restaurant chain with over 200 stores nationwide, announced that 48 stores in California would close over the weekend because of a large number of rising costs, including employee wages., According to Rubio’s, a total of  48 “underperforming”  stores will be closing throughout the state. Half of the closures are to be in the Los Angeles area, with 11 closing in Northern California and the rest in the San Diego area.

“The rising cost of doing business and the current business climate in California are key factors in the closures,” Rubio’s said in a statement. “Making the decision to close a store is never an easy one. While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come.”

As the Globe reported in March:

California Governor Gavin Newsom just signed Assembly Bill 610 into law, which is the “clean up bill” granting exemptions for the $20 fast food minimum wage for fast food restaurants. Because as the Globe reported, Newsom’s PaneraGate scandal is admission that California’s arbitrary minimum wage laws hurt all businesses, but especially small to medium sized businesses.

It’s pretty clear now that the sole purpose of the law, given the specific exempted restaurants, is all part of the destruction of the middle class.

The bill language says: “This bill would exempt additional restaurants from the definition of “fast food restaurant,” including such restaurants in airports, hotels, event centers, theme parks, museums, and certain other locations.”

AB 610 will exempt fast food restaurants in airports, hotels, event centers, theme parks, museums, gambling establishments, corporate campus cafeterias, and Publicly owned lands including ports, piers, beaches and parks concessions – not just from the $20 an hour minimum wage starting April 2024, but also from regulation by Gov. Newsom’s creepy new Fast Food Council, which the Globe has reported on as government expansion and control.

In late February, the Globe reported:

California Governor Gavin Newsom facilitated an exemption in the original bill, AB 1228, for a longtime friend from high school, donor and the billionaire who owns a number of Panera Bread locations, from California’s new $20 minimum wage law. 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.

By June, the Globe reported:

Most notable, however, has been the massive amount of layoffs. Over 1,200 Pizza Hut drivers have had announced lay-offs, and were replaced by services such as DoorDash and Uber Eats. Roundtable Pizza has also done the same with many of their delivery drivers, with many other chains also quietly doing the same for deliveries in the following months, as seen by the jump of fast food businesses on food delivery sites.

As the economic effects took a toll before the law was even in place, lawmakers scrambled to mitigate the damage. AB 1228 bill author, Assemblyman Chris Holden (D-Pasadena), created a new bill to grant numerous exemptions in an attempt to lighten the economic blow of AB 1228, including to fast food restaurants in airports, stadiums, casinos, events and corporate campuses. However, as the Globe noted, AB 610 does anything but cleanup the mess caused by AB 1228. While it was passed, closures still continued. Most were smaller scale layoffs with a handful of employees being let go from certain locations. However, some were larger scale closures, such as the Rubio’s Coastal Grill closures.

Milton Friedman warned decades ago that the minimum wage “has the effect of making the poor people at the bottom of the wage scale—those it was designed to help—worse off than before.”

John Stossel also reported in May on the new minimum wage:

Thousands of Californians have already lost jobs because some restaurants closed. Others lost income because their employer cut worker hours. The chain El Pollo Loco cut employees’ hours by 10 percent.

Pizza Hut announced that they will lay off more than a thousand delivery drivers. One such driver, Michael Ojeda, understandably asked, “What’s the point of a raise if you don’t have a job?”

Workers who still have jobs will lose them because now their employers have more incentive to automate. Chipotle just created a robot that makes burrito bowls. Even CNN acknowledged, “Some restaurants are replacing [fast food workers] with kiosks.”

The day Newsom signed the bill, he was asked, “Can Californians expect the prices of their McDonald’s and Starbucks to go up?”

Newsom deceitfully replied, “I’ve heard that rhetoric before. And it didn’t happen!”

Math is hard.