California is about to find out what happens when you jack the minimum wage up to $20 an hour as businesses begin to lay off thousands of employees.
In an utterly predictable development, fast food chains are engaging in their own form of a bloodbath following Governor Gavin Newsom (D-CA) signing the bill last September for a $20-an-hour minimum wage, which was raised from $16 an hour.
Despite being warned the move would force businesses to engage in mass layoffs, raise prices astronomically, go out of business, or flee the state, California Democrats claimed boosting the wage to $20 an hour would create jobs. The assertion shows a woeful ignorance of economic principles and the determination to put politics before the well-being of both businesses and workers. Automation will also increase because of this ill-considered destructive move, reducing jobs even further.
“California restaurants, particularly pizza joints, have outlined plans to cut hundreds of jobs in the months leading up to the April 1 wage mandate, according to state records. Other operators said they have halted hiring or are scaling back workers’ hours,” the Wall Street Journal reported.
(Video Credit: NBC Bay Area)
A preening Newsom signed the bill into law on Thursday and was applauded by workers and union leaders at an event in Los Angeles. Unbelievably, it seems they have no clue that this will result in the loss of jobs and business in the state, or they just don’t care.
“That’s a romanticized version of a world that doesn’t exist,” Newsom said concerning the fact that fast food jobs were originally meant for teenagers according to the Associated Press. “We have the opportunity to reward that contribution, reward that sacrifice, and stabilize an industry.”
“Michael Ojeda, a Pizza Hut driver for eight years in Ontario, Calif., received notice in December that his last day would be in February, according to a letter from his former employer. Pizza Hut franchisee Southern California Pizza offered $400 in severance if he stayed through February, but Ojeda, who said he made hundreds of dollars a week in wages and tips as a delivery driver, went on unemployment instead…” The Wall Street Journal wrote.
Democrat lead California fast-food locations are letting go of workers ahead of a new $20 minimum wage law.
Michael Ojeda, 29 – “Pizza Hut was my career for nearly a decade and with little to no notice it was taken away.” pic.twitter.com/TULG7sGk6Q
— Noble Road (@noble_road) March 26, 2024
“Some pizza-chain operators in California are laying off drivers ahead of the wage law’s start and farming out delivery service to apps. Franchisees for Pizza Hut and Round Table Pizza, a chain of around 400 units founded in Menlo Park, Calif., have said they plan to lay off around 1,280 delivery drivers this year, according to records that major employers must submit to the state before large layoffs,” the media outlet added.
Other fast-food outlets are opting to spike their prices.
“Everyone is going to have to pay more,” Jack Hartung, the chief financial officer of California-based Chipotle Mexican Grill, stated according to the Wall Street Journal.
Chipotle has been forced into raising its prices four times over the last two years because of the pandemic and California’s insane policies. The chain expects to raise them another 5% to 9% in its California restaurants to cover the increased minimum wage.
To no one’s surprise California fast food establishments have begun to laying off workers and cut hours of remaining staff for the looming $20 an hour minimum wage.
How could anyone think this was a good idea? pic.twitter.com/nxl5dhJ1ak
— RareImagery (@RareImagery) March 25, 2024
“The National Owners Association, a group of McDonald’s franchisees, estimated it will cost Golden Arches operators an additional $250,000 annually per restaurant, an amount that can’t readily be absorbed, according to an email from the group last September,” the Wall Street Journal said.
“McDonald’s Chief Executive Chris Kempczinski said during an October earnings call that prices would go up at California restaurants as a result, but the company hadn’t determined by how much,” the outlet continued.
Fast food chains will also be forced to hire fewer workers because of the higher minimum wage.
“Burger King aims to install more digital-ordering kiosks in its U.S. restaurants, with California now a focus, said Josh Kobza, chief executive of parent company Restaurant Brands International, in an interview,” the Wall Street Journal said.
The new law affects large fast-food chains. Panera was excluded in a contrived deal between the business owner and his buddy Newsom.
California’s new minimum wage laws will require fast food companies pay workers $20 per hour, but @panerabread and other chains that sell bread as a standalone menu item might not have to follow the rule. Why? pic.twitter.com/7GX8Kq1fgX
— reason (@reason) March 22, 2024
Employees fear the hammer is about to descend on all of them over this.
“The research, based on a nationwide canvass of 1,000 current or recent restaurant employees over age 18, also shows that 46% of respondents expect the hours of California workers to be cut. Forty percent anticipate layoffs, and nearly the same proportion (38%) predicts that hiring will slacken,” Restaurant Business reported.
The minimum wage hike is destined to cause another wave of businesses to flee the state as well as residents. California’s unemployment rate jumped to 5.3% in February… the highest in the nation.
“California’s unemployment rate was up 0.1 percentage points from January as it surpassed Nevada, which previously had the nation’s highest unemployment rate. Nevada’s rate fell to 5.2%, from 5.3%, in the same time, according to data released Friday. The national unemployment rate was 3.9% in February, a two-year high,” the San Francisco Chronicle reported.
“Underscoring a faltering job market, California’s job growth in January was revised downward to 25,600 jobs compared to an earlier estimate of 58,100 jobs, according to the California Employment Development Department,” the outlet noted.
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Author: Terresa Monroe-Hamilton
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