Mill Valley, CA: Workers at In-N-Out location behind counter take orders. (Photo: David Tran Photo, Shutterstock)
Over 5,400 CA Jobs Lost Since $20 Fast Food Wage Hike, Debunking Newsom’s Claims
‘This isn’t corporate greed – they just want to stay in business’
By Katy Grimes, September 23, 2024 3:18 pm
Six months since Gov. Gavin Newsom’s $20 per-hour fast food restaurant minimum wage law went into effect, California’s fast food industry job loss is now down a net 5,416 jobs since January. Companies were already sounding alarms about the new 25% wage hike in Assembly Bill 1228’s $20 fast food minimum wage, even before implementation.
But just before the new BLS numbers could drop, Gov. Newsom rushed out an op-ed for Fox News claiming “this modest law” was being mischaracterized by “conservatives and their enablers in the media.”
Pot, meet kettle.
The Globe spoke with economist Rebekah Paxton, the research director at the Employment Policies Institute. She said the wage increase was a 25% hit, and can increase every year. Yet Newsom claims this is something businesses can overcome.
Paxton also told the Globe that the BLS’s fresh jobs data show that this is the worst fast food job growth rate since the Great Recession.
And, “California’s neighboring states do not have this fast food job loss problem: Nevada and Oregon (neighbor states for which data is available on the fast food industry) both show net fast food job gains over the same period.”
But backing up a bit, less than 3 months after Gov. Newsom’s $20 per-hour fast food restaurant minimum wage went into effect, a survey reported that 74% of California fast-food restaurant owners said “there is an increase in the likelihood of shutting their restaurants down – an increasingly real concept as restaurants continue to shutter,” the Daily Mail reported.
“Recent reporting from Business Insider showed how this is already happening, with customer foot traffic around California’s fast food restaurants considerably down.”
With so much statewide and national press critical of Gov. Newsom’s devastating 25% wage hike in fast food, the Newsom administration had a trusty media friend run cover for them. The Los Angeles Times’ Michael Hiltzik obediently authored a column claiming, “The fast-food industry claims the California minimum wage law is costing jobs. Its numbers are fake.”
No, the numbers aren’t fake – the Newsom administration manipulated data, gaslighting everyone about the job losses and business closures, claiming there were job increases. The LA Times mixed data up using data from 2023 to show that fast-food employment is up. “The wage hike took place Apr 1 2024. That’s not even math. That’s just being able to read a calendar,” California Policy Center’s Will Swaim retorted.
As the Globe reported in June and July, Some fast-food restaurants have had to lay off staff completely. A June article gave details:
Some stores outright closed. Most notable, however, has been the massive amount of layoffs. Already, over 1,200 Pizza Hut drivers have had announced lay-offs, with drivers to be replaced by services such as DoorDash and Uber Eats in the coming months. Many other chains are currently also looking into doing the same for deliveries.
In early 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 one 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 latest Bureau of Labor Statistics’s report came out two days after Newsom’s Fox op-ed.
Paxton said that EPI’s recent survey shows that business owners predict even more hardship into 2025, with 93% saying they will need to raise prices even further and 89% saying they will need to lay off staff or reduce hours well into next year.
She also pointed out that while economists prefer seasonally revised data, even though both non-seasonal data and seasonally-revised data show a decline in fast food jobs.
“California is down more than 5,400 jobs, net loss,” Paxton said. “This is a simple subtraction problem. And it doesn’t even include workers’ schedules revised for fewer hours, lack of or less overtime – a lot of numbers aren’t included in this data.”
Rebekah Paxton continued on the subject:
“The Bureau of Labor Statistics’ own revised data shows what’s happening on the ground: California’s fast food industry is losing jobs as a result of AB 1228. Newsom’s ‘What’s good for workers is good for business’ catchphrase is wrong on both accounts–he only needs to talk to laid off employees and priced-out residents to see the truth. The Governor and the Fast Food Council have an obligation to correct course and save fast food jobs before it is too late.”
Newsom claimed in his op–ed, “It [the minimum wage law] was used as a scapegoat for businesses declaring bankruptcy, firing workers and more.”
“This law, statewide wage increases and added regulations make it very hard to run a business in California,” Paxton said. “Newsom’s using this law as a scapegoat.”
“This is a very messy implementation of this law.”
We discussed the messy Panera Bread exemption to the minimum wage increase, and how including exemptions to the wage hike is an admission that the law is bad.
The Employment Policies Institute survey reported some devastating responses by the California fast-food restaurant owners:
- 98% say the $20 minimum wage law applies to their limited-service restaurant.
- 41% say the minimum wage law will cost their restaurants $100,000-$200,000 per restaurant.
Additionally:
- 98% California fast-food restaurants said they raised menu prices.
- 89% reduced employee hours.
- 73% limited employee shifts or overtime.
- 70% reduced staff or consolidated positions.
“The governor and his administration are touting their policy, but any well-meaning economist would never. This undermines the reasons people own their own businesses.”
Paxton continued: “Fast Food franchisers aren’t raking in profits – most are running one or a couple of operations. This isn’t corporate greed – they just want to stay in business.”
- Kamala’s Anticipated Coronation - September 26, 2024
- Gov. Newsom Vetoes Bill to Require Caltrans Study Top Crash Locations on State Highways - September 25, 2024
- California Globe Voter Guide: 2024 Ballot Measures Broken Down to Just the Facts - September 24, 2024
RELATED ARTICLES
-
-
September 28, 2023
-
February 20, 2024
It’s a very good thing —– in the midst of a very bad situation of hemorrhaging jobs and future shuttered businesses —- that the Globe’s Katy Grimes and Evan Symon have been covering the fast food $20 minimum wage fallout so consistently and so well. Without this kind of coverage Gavin Newsom might completely get away with his bald-faced lies as he decimates California further in his conscienceless way.
And boy oh boy is he going for it. He is willing to lie, lie, lie, in the face of facts and hard statistics to have people believe that the $20 fast-food minimum wage crap is helpful and not destructive. He’ll lie through his teeth and tell you that jobs are added, employees benefit (they don’t), franchise owners aren’t forced to close restaurants, customers are happy with price increases; any absurdity is not too absurd for Gavin.
Whenever Katy Grimes posts a fact-based article on this subject it apparently triggers him SO MUCH he sends out his horde of flying monkeys to harass and demand article retractions after which some of them overwhelm the comments section with their phony, obnoxious nonsense “arguments.” Check out past articles on this topic and you’ll see the swarms of flying monkeys in the comments. Looks like ANY truth getting out on this subject is apparently a threat. A threat to lies fed to uninformed voters, attempts to unionize fast food workers, drive out the middle class in CA, and finish the job of turning California completely to $%#@.
It’s not just the $20 minimum wage it’s all the other costs utilities, insurance, the price of goods, higher rents. The stores that are closing is mostly underperforming stores since they are not able to withstand the costs.
EXACTLY.
You’re right that all the costs in addition to the $20 wage are typically not mentioned (which was all I saw at first and impulsively replied), but over time all fast-food entities (and other businesses) will be affected and damaged and will have to shutter or switch from humans to kiosks and robots. The policy stinks and it is not “sustainable.”
Fake news. You must be a spokesperson for the shareholders. It’s an easy equation. Take what it cost to make a Big Mac, with their super efficient supply chains and networking. Cost them about a a dollar. They sell them now for seven+. That’s a six hundred percent profit. What you don’t understand is that they already had raised prices to this level. Now they want to raise them again ? Add they been getting away with paying the lowest wages for decades under the guide of “entry” jobs. These chains are top heavy and if theyre losing it ain’t from having to pay a few extra dollars to their workers.
It’s real news and you obviously have never operated a restaurant or any other business for that matter. The restaurant industry is notorious for small profit margins and the average profit margin for fast food restaurants is around 5-8%. Food costs have soared to record highs due to out of control inflation in the Biden/Harris economy. Insurance, utilities, and other costs to operate a restaurant have spiraled to out of control levels. Labor costs have risen to such high levels that many restaurants can no longer operate profitably because of the wage dictates imposed by Gavin “Hair-gel Hitler” and the criminal Democrat mafia in the legislature who have never started or operated a business.
If anything is top heavy, it’s California’s bloated government bureaucracy filled with your Democrat masters who live like royalty at the expense of struggling taxpayers who support them.
Where is the Deputy Director for Rapid Response (He/Him) response? I apologize that I forgot his name. I’m sure that he has cranked out yet another fine response that the Newsom administration is doing a great job.
Brandon Richards (He/Him).
Newsom’s is a liar. #worsegovernorever
well I work at a Mcdonalds in sacramento ca, and I tell angry customers to write the Governor and I tell every customer that asks about the 20 an hour it’s not worth it. you know not only did it level the playing field by an assistant manager makes the same as me. it has completely eliminated any chance to move up in management. Because training cost money.
You know it would have been better if we were given a chance to opt out of the 20 an hour . Now that is fair.
You’re the best —- thank you for telling every angry customer what’s what.
That’s a lot of customers better informed going out than they were coming in.
These chains are on every street corner. I see more and more being built. Either you have some affiliation with these chains or are ignorant and blind. It’s about profit margins. Their workers are strictly thete to increase and maintain the huge profit margins. Entry jobs they’ve been calling them. Are you kidding me ? The fast food chains have expanded exponentially ripping off their workers. Gradually up to now ripping off the consumer.
Fast food outlets and chains are closing down operations because it’s becoming increasingly unprofitable to operate with food, labor, insurance, utilities, etc. costs soaring to record high levels due to out of control inflation under the Biden/Harris regime and the dictates of Gavin “Hair-gel Hitler” Newsom and the criminal Democrat mafia in the legislature. Any food outlets that remain will probably have to drastically cut costs by eliminating workers and work hours, reducing food portions, and using robotics.
Newsom must be REMOVED and mass Repealing must Begin!!!
Hi All,
my name is Danny coffey I work at Wendy’s and Visalia California.
I can tell you from fat Wendy’s has cut out hours back due to the $20 an hour increase.
this is why liberal Democrats love to make bad policies thus crushing the American people.. I believe liberal Democrats are the single most dangerous entity to the good old USA..
THEY HAVE VERY DESTRUCTIVE POLICIES
Hi All,
my name is Danny Coffey 😁
I work at Wendy’s in Visalia California.
I could tell you from fact that Wendy’s has cut back our hours.
which means less money in my pocket to pay my bills and to sustain myself.
liberal Democrats seek to destroy America when they get empowered through destructive policies.
when are people in America going to learn not to vote for liberal Democrats
❓❓🆗❓
Thank you for posting your experience and thoughts Danny Coffey 🙂
Wage floors can’t be judged on just one dimension. That is the fundamental error in articles like this.
The ones who remain employed will receive higher wage rates, but fewer will be employed – basic economics.
As Prof. James Tobin, a member of president Kennedy’s Council of Economic Advisers, wrote: “People who lack the capacity to earn a decent living need to be helped, but they will not be helped by minimum-wage laws, trade-union wage pressures or other devices which seek to compel employers to pay them more than their work is worth. The more likely outcome of such regulations is that the intended beneficiaries are not employed at all.”
The loss to the unskilled workers will not be offset by gains to others. Smaller total employment will result in a smaller total output. Hence the community as a whole will be worse off.
It’s not one dimensional. It’s three dimensional. Wage floor, time, and employment level.
You would have to be an complete idiot to not see that fast food consumption has an elastic demand curve. But, then again, the Democrats have proven to us they are stupid beyond belief.
$20 an hour for entry level jobs is ridiculous!
Gavin “Hair-gel Hitler” Newsom is gaslighting about the fast food job losses just like he’s doing on every other issue facing struggling Californians? Newsom’s reptilian WEF globalist masters must be ecstatic on how thoroughly he and his criminal Democrat mafia cronies are destroying the state in their quest for further power and control?
I don’t buy fast food.
the wage hike is hurting the same people it was supposed to protect
our state is beyond forked
The consequences of this terrible law are so far reaching. For starters, when you arbitrarily set a price for a service (aka labor) that does not match the value of said service, you end up throwing a lot other things out of whack. Everyone who is still being paid less than $20/hour because they don’t work in fast foods has to be wondering why they are even wasting their time at their current job. Also, every fast food restaurant, because they are being forced to pay top dollar now for labor, is going to expect any applicant to have many years of experience who will require minimal training and be a model employee from the start. Any teenager looking for a summer job at the local Micky D’s is out of luck. Flipping burgers at Jack N’ The Box was never meant to be a long term career path unless you were planning on working you way up to the management chain (of which there are only a limited number of openings). For the vast majority of people, these types of jobs were a means to get a little extra cash while they went to school or looked for better opportunities that lead to much more rewarding and fulfilling career paths.
I find it funny that In-N-out pictures accompany the article but In-N-Out was paying $22 an hour before Newsom signed the bill. The big layoff list is restaurants that were already failing. If the price is too high for fast food stop eating it.