Do You Want Fries With That Shakedown?

California’s government has outdone itself with AB 257, a controversial sop to unions that will hurt the poor and raise prices in the fast-food industry.

There’s a joke circulating in California that goes like this: What’s the difference between the Titanic and the state of California? Answer: The Titanic went down with its lights on.

You don’t have to live here to get the dark humor, though it helps. Governor Gavin Newsom led the effort to eliminate oil drilling and ban the sale of new gas-powered vehicles beginning in 2035 — and simultaneously begged us not to run the AC or charge electric vehicles during California’s annual sizzling farewell to summer.

So, few of us were surprised when, on Labor Day 2022, the governor signed Assembly Bill 257, which promises to rescue the poor but will in fact immiserate them. The law was set to go into effect today but has been put on hold by a judge, for now.

Called the FAST Recovery Act, the new law will do for unions what decades of organizing could not accomplish in the dynamic fast-food business. It neatly eliminates the hard work of organizing unwilling workers by declaring them wards of a state commission comprising 13 political appointees who will govern work and wages in California’s fast-food businesses.

In California, political appointees like those proposed in AB 257 are manufactured by the legislature’s Democratic supermajority. That veto-proof majority, in turn, is curated by union leaders — people who raise in excess of $1 billion annually through union dues and spend much of that cash to finance the campaigns of candidates who, once in office, return the favor by doing what the unions tell them to do — things like passage of AB 257.

The smart money says California’s elected officials will hustle to appoint union-friendly commissioners who will quickly impose on fast-food operators a $23 hourly wage, more costly benefits, and molecular regulation of work rules.

In an industry that operates on razor-thin margins, this will have two immediate predictable outcomes. On the worker side, higher wages, richer benefits, and more cumbersome labor laws will lead to job cuts as franchise operators seek to curb their skyrocketing labor costs. In some places, restaurant owners will rapidly automate; ATM-like ordering kiosks will replace actual people — primarily immigrants and other minority people who, by way of the fast-food business model, are just beginning their ascent on the American economic ladder. Other business owners may simply sell off to larger enterprises whose high volumes will allow them to cope with slimmer margins. That will make it harder for workers to rise into positions of management and ownership.

On the customer side, as some franchisees simply close permanently, we’ll see the expansion of what progressives have called “food deserts” in poor communities already underserved by grocery chains. Customer service in the remaining stores will decline and prices will rise.

So, in a kind of grim partnership, poor customers and rising workers, immigrants and the native-born, will suffer together. This is the iron law of California progressivism: Claim that new laws will help the poor. When the actual effect turns out to be catastrophic for the poor, blame capitalism/markets/billionaires/racism, and expand government control of the business. Rinse, repeat, and promote as a national — even global — model for equity. And if Californians have anything to say about it, AB 257 will be coming to you, no matter where you live in the United States.

The most eye-popping criticism of AB 257 came from California’s own Department of Finance. In June, the department recommended that legislators vote against the bill. Its analysis concludes with language that can be applied to much of California’s regulatory empire, and is worth quoting in its entirety:

Finance is opposed to this bill because it creates significant ongoing costs at DIR [the state Department of Industrial Relations]. Additionally, it creates a sector-specific rule-making body within DIR, which could lead to a fragmented regulatory and legal environment for employers and raise long-term costs across industries. Finally, it is not clear that this bill will accomplish its goal, as it attempts to address delayed enforcement by creating stricter standards for certain sectors, which could exacerbate existing delays.

“Not clear”? In California, it’s absolutely clear that AB 257 — now law — will not accomplish its goal.

Where is such a bad idea conceived? Partly in academia, where professors celebrate as progress the imposition of a failing European model of government–labor–business “cooperation.” Writing in Fortune, Thomas Kochan exulted that, with AB 257, “California has a unique opportunity to launch a path-breaking high-road business and employment strategy for owners and workers in its fast food industry.” He hopes that its success will spread “across the nation.”

(Note to Dr. Kochan: You’re professor emeritus at MIT’s much-honored Sloan School of Management. I just live and work in California. But please, never, ever use any form of the infinitive “to break” and “California” in the same sentence. It’s what people in your school’s psych department call a Freudian slip.)

In California, the engine running AB 257 is organized labor, particularly the Service Employees International Union (SEIU) and its national “Fight for $15” activist wing.

SEIU has struggled lately. In part that’s because the Supreme Court’s 2018 decision in Janus v. AFSCME made government-union membership voluntary. Nearly 30 percent of government workers eligible to join SEIU and other unions have responded by hitting the eject button. The hundreds of dollars those workers save on annual union dues means lost revenue to the unions hoping to represent them. (Disclosure: California Policy Center, where I am president, has played a leading role in helping workers leave their unions.)

That rush to the union’s exits has created a cash crisis at SEIU. The union responded by pushing AB 257 with the expectation that the Fast Food Council will move rapidly to recommend universal membership in SEIU as the only solution to low pay and dangerous work conditions.

About those work conditions: Many media reports banging the drum for AB 257 relied on a UCLA Labor Center study that claimed to discover that working at your favorite burger joint is like cobalt mining. Vox cited UCLA’s finding that “43 percent of workers experienced workplace injury or illness, nearly half experienced verbal abuse, and a quarter said they were retaliated against by their managers for reporting workplace issues.” So did the Los Angeles Times, the San Francisco ChronicleCalMatters, and the Sacramento Bee.

Reporters were so eager to amplify a story about industrial “wage theft,” “workplace injuries,” and medieval exploitation that none took the time to examine UCLA’s study. In fact, recently published internal UCLA documents reveal that “the study was part of a larger advocacy strategy by the SEIU and its Fight for $15 campaign.” Specifically, the documents show that UCLA’s “independent” researchers outsourced the labor of recruiting and surveying fast-food workers to SEIU. When the study was released, enthusiastic reporters asked to interview the aggrieved workers. Then, UCLA’s documents show, “those labor groups even took efforts to obscure” the snuggly relationship between researchers and union activists.

You might be tempted to say that because the UCLA study was junk — corrupt, in fact — we may never know how truly grim things are in the fast-food business. But we do know: You are in fact safer working in a fast-food restaurant than in most other industries.

Newsom’s signature on AB 257 was still wet when SEIU unleashed its national media campaign promoting the California law as the solution to labor problems everywhere. “This is LANDMARK labor legislation that presents a way forward for fast food workers in this country,” SEIU said over and over. Using the hashtags #UnionsForAll and #AB257, union activists in TexasFloridaMissouri, and beyond posted photos of workers spontaneously celebrating California’s win as their own. Were they moved by the spirit of international labor, roused by their own personal experience? They were not. Their messages were crafted and amplified by one of California’s largest unions.

Let’s summarize: AB 257 will likely kill the jobs of immigrant and poor men and women who want to work in the fast-food industry — because this work, however difficult, is better than the alternatives. It imposes what union organizers could not achieve through voluntary association. It will raise food prices and limit food options in already struggling neighborhoods. It is opposed by the very regulatory body that is supposed to supervise its implementation. Its passage relied in part on a corrupt “study” by a major state university working with the union that will benefit from the new law.

It’s now likely that AB 257 will be opposed at the ballot box. As soon as Newsom signed the bill, an association representing fast-food businesses began gathering signatures for a statewide ballot proposition to repeal it. On December 9, the California secretary of state’s office declared that the association had submitted more than the minimum number of signatures to qualify the measure for the November 2024 ballot. Under California law, that should have postponed implementation of AB 257. Instead, the state’s Department of Industrial Relations announced it would dispense with a century of case law and impose the law on January 1. On December 29, the association announced it will sue the state to uphold its own laws. One day later, on December 30, a state judge cut the baby in half: The state can begin considering appointments to the commission, but it can’t change wages or work rules.

Click here to read the full article in the National Review

California Union Alleges That Fast-Food Effort to Block New Labor Law is ‘Willfully Misleading Voters’

California’s largest union on Thursday lodged a complaint with state officials alleging that a fast-food industry coalition violated state election rules in its campaign to block a landmark labor law from going into effect.

The complaint by Service Employees International Union California, which was filed both with California’s secretary of state and its attorney general’s office Thursday, focuses on a referendum filed in September seeking to repeal AB 257, which Gov. Gavin Newsom signed into law on Labor Day. The union sponsored the legislation, known as the Fast Recovery Act, to boost protections for fast-food workers. 

The union alleges that in a sprint to qualify the referendum for the November 2024 ballot, business trade groups, fast-food corporations and franchisees are backing a vigorous and costly voter signature-gathering process that is “willfully misleading voters.” Hired petition circulators for the referendum, according to the complaint, have approached voters and asked them to sign the petition under the false pretense that the effort seeks to raise the minimum wage for fast-food workers.

Instead, the referendum effort would allow voters to decide whether to overturn the Fast Recovery Act, which creates a first-of-its-kind council of workers, company representatives and state officials with the authority to raise the minimum wage for franchise restaurant workers as high as $22 next year.

The council has a mandate to set minimum industry standards on wages, working hours and other conditions for fast-food workers statewide. It’s a model that could transform the way workers negotiate standards with their employers not just in California but across the U.S.

Throughout the legislative process, fast-food corporations and franchisees argued it unfairly singled out their industry, and would burden operations with higher labor costs and cause food prices to skyrocket.

Save Local Restaurants, the coalition pushing to overturn the law, said in a statement that it “has been vigilant in maintaining compliance with California’s election laws” and added that it finds the complaint “frivolous.”

“This is another brazen attempt by the SEIU to force a law on Californians that they do not want and that they cannot afford,” said the coalition, which is spearheaded by the International Franchise Assn. and the National Restaurant Assn. 

The coalition said, in line with past critiques, that the new law would raise food prices and ultimately “cost thousands of jobs, and force the closure of local businesses.”

The coalition said it has collected “nearly a million” signatures thus far: “We are on track to collect hundreds of thousands of signatures above what is legally required due to the voters’ overwhelming opposition to this misguided law.”

It’s standard practice to collect more than the minimum number of signatures because some signatures may be deemed invalid.

The complaint alleges several instances of petition signature gatherers misrepresenting the issue. One contracted circulator in Los Angeles repeatedly said the petition “was for the minimum wage to go up,” while another in Stockton, Calif., asked for a signature on a “petition that will raise the minimum wage for fast food workers to 22 bucks an hour,” according to the complaint.

Click here to read the full article in the LA Times