Fast Food Restaurant Owners Brace As $20 Minimum Wage Law set To Go Into Effect Next Week

New law causing more layoffs, reduced hours across state

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With only a week to go before the AB 1228 $20 fast food minimum wage law comes into effect, restaurants across California continue to make last minute firings, employee hours cuts, and other measures to remain profitable and stay in business.

Following the signing of AB 1228 in October by Governor Gavin Newsom, the new $20 minimum wage for fast food employees, a massive jump from the $16 minimum wage, has had multiple companies take extreme measures. Some, like Chipotle and McDonalds, have announced already raised prices before the wage raise date of April 1st. Others are investing in automated kiosks and other automated devices to help reduce the number of employees. Some stores outright closed.

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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. Roundtable Pizza has also done the same with many of their delivery drivers, with many other chains currently also looking into doing the same for deliveries. Seeing signs of massive layoffs ahead, many workers have even transitioned out to other lines of work in anticipation.

In recent weeks it has got even messier. Panera Bread, which was originally exempt over having in-store bakeries and selling bread on stand-alone, voluntarily went to the $20 wage following accusations that Governor Gavin Newsom had allowed the exception to take place to benefit a major donor. AB 1228 bill author, Assemblyman Chris Holden (D-Pasadena), recently also created a new bill that would grant numerous exemptions to the bill in an attempt to lighten the economic blow of AB 1228. However, as the Globe noted, AB 610 does anything but cleanup the mess caused by AB 1228.

While there have been attempts to try and spin this as a major labor win, with the Service Employees International Union (SEIU) launching the new and largely toothless California Fast Food Workers Union in February, fast food restaurant owners and managers have been bracing for the worst. Now, with a week left, many stores are scrambling to cut back employee hours, fire employees, set up lines so fewer employees are needed, and figure out what hours to close during the day during slow hours.

“This is what is incredibly stupid of the bill,” said “Annette”, an owner of a sandwich chain restaurant in Upstate California to the Globe. “If I still lived in LA, a $20 minimum wage would have been a major pain. Sure, you get customers coming in, but there are a lot more expenses for a restaurant there. I mean, taxes alone. Then, up here. You can have a restaurant in Siskiyou County or Shasta County where taxes are cheaper, but you still struggle with fewer customers. You can even have a spot on the Interstate on the 5, but there wouldn’t be enough traffic or cars coming in to justify the $20 an hour.

“It was a flat increase. You need to take into account a ton of variables. They were just thinking of the cost of living for employees. But that should just be one factor out of many. You have to go by county or by city. And you hit the nail on the head by pointing out just how much we are investing in automation and technology. It has been killing a lot of industries for years, especially blue collar ones. And now it is going after minimum wage jobs like these all thanks to new laws like these.”

$20 an hour hurting businesses

Another, a KFC franchisee, told the Globe “Major hour cutbacks for sure are happening here. We already kept it below 32 so not many are considered full time. But now we’re looking at the equivalent of giving them another shift off. We’re doing the same with less and consolidating tasks or having people only be at the register when customers are there.

“So people have been doing the math on $20 per hour. You know, $800 a week, or $41k  a year. So, first of all, virtually no fast food worker works that long. This is a part time gig for kids, or if they’re lifers, they do two or three stores to make the equivalent of a full time job. And that’s all before taxes.

“Where it becomes a problem for us is, obviously, the costs. But, for a silver lining, we are now putting the few people above the 32 hours mark well below 30 now, so a lot of benefits just went out the window for them. I’m not using any glee or anything here. It sucks and we really wanted to do right by our employees as much as possible. But this $20 ruins that. If you see more people working 2 or three jobs or are frustrated by not having any customer service, thank AB 1228. We’re doing what we can to make this work, but they aren’t giving us any wiggle room.”

One of his employees, Pedro, who has worked there for almost 15 years, added that “My hours are being cut. This pay raise from the minimum wage is doing nothing because of that. So now I’m looking to take on another job to make ends meet. Which is hard now, as a lot of fast food workers are doing the exact same thing as me since they are in the same position all within the same industry. And I voted for these people who approved this.

Click here to read the full article in the California Globe

Comments

  1. Its rather incredible that the state with a deficit of billions can dictate the minimum wage for private companies. Thanks Newsom and keep voting for Democrats

  2. The stupidity/insanity of the communist left on display. Newsom, Barbara Lee, AOC and Bernie Sanders leading the charge for huge wage increases are costing people their jobs, their livelihoods, and their benefits. Many of these workers are VERY angry. And don’t forget the millions of customers now paying $18 and more for a burger, fries and a drink. $65 for a pizza. Businesses will be going out, because their former customers won’t be.

  3. Donald J. says

    You get what you vote for…

    • Another problem is that Pedro and most others have no idea what they are voting for and thus get bit in the butt.

  4. I don’t eat out and now thousands of others will quit.

  5. Hey Hey people….If you don’t go along with this 20.00 minimum wage then YOU ARE A RACISTS…Thats according to FEUR HAIL NEWSOM….Only his friends ARE EXEMPT…..This is CALIFORNIA…WOULD YOU EXPECT ANYTHING ELSE???

  6. Treva Bennett says

    No shame today. When Newsom sets people up for failure he’s hailed as trying to help the common worker by raising their wage. He well knows he’s not only putting them out of work and likely shutting the business down. Due to lack of business because of price increases suppliers will be hurt and on and on the circle of loss goes. Ahh but Newsom has done his job putting more people under control of the government, Remember socialism is great until you run out of other peoples money. California is broke, he’s running people out of state yet he continues hiis destructive philosophy. Anyone voting Democrat has to be NUTS!

  7. well…with more workers having to look for 2nd and 3rd part time jobs…the dems can claim that they created MORE jobs!

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