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EconomySeptember 18, 2023
McDonald's Slams New 'Draconian' California Fast-Food Laws: "Devastating financial blow"
The National Owners Association, an independent advocacy group of more than 1,000 McDonald’s owners, called California’s recently-passed AB 1228 "draconian" and will cause 'devastating financial blow' in a memo distributed to its members.
AB 1228 was passed by the state Senate late Thursday and heads to Gov. Gavin Newsom’s desk for signature. It includes a wage floor of $20 for California workers at fast-food chains with at least 60 locations nationwide, starting April 1.
I am sure fast food workers have nothing to worry about. It is not like all the cashiers will be replaced with iPads or something like that.
The National Owners Association projects the bill will cost each restaurant in the state $250,000 annually. The group said the costs “simply cannot be absorbed by the business model.”
The bill would also create a 10-person council to govern fast-food chains and set guidelines for working conditions and wages. Which definitely sounds like socialism and more government take-over of private enterprise, but whatever.
When signing the original version of the legislation, California Gov. Gavin Newsom said, "California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity. Today’s action gives hard working fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry."
One reason Newsom’s quote is so dumb is that he implies that it's fast food workers who have contributed to the economy, rather than business founders and owners, even though it takes absolutely no risk to become a cashier at McDonalds.
Minimum wage hikes cause many bad outcomes for the employees they purport to help.
While some employees would obviously make more money, it would do so at the cost of their colleagues, who would pay for it with their work hours being cut or losing their job.
The majority of three decades of minimum wage research finds hikes cause significant job loss, disproportionately affecting entry level or lower-skilled employees.
Researchers also find wage hikes contribute to inflation, especially causing food price increases.
When businesses have to pay employees more with no corresponding increase in revenues, they are forced to lay off workers, either replacing them with automation or passing the costs on to customers.
And a lot of the time, the cost of a higher wage can’t be entirely passed on to consumers, as many can’t afford to pay, and end up buying less. That leads to even more layoffs in some endless cycle.
The law may only affect franchises with at least 60 locations, but that is just the start. California will probably expand it until it reaches a minimum wage of 20$ statewide.
And then when businesses are forced to increase prices to compensate for the increase in wages, prices will go up everywhere. And then leftists will have to increase the minimum wage again and it becomes an endless cycle of wage increase coupled with inflation.
And what about when the business closes down a certain location because they can’t afford to pay the employees? That minimum wage law essentially would give them $0 an hour.
Economists have also found wage hikes may cause loss of other employment benefits such as healthcare coverage. Another study found minimum wage hikes push rental costs higher.
The aftermath of raising the minimum wage is so bad that I would not be surprised that California lawmakers will end up passing a bill that somehow prevents replacing workers with automation.
Raising the minimum wage is probably the worst thing to do if you want to lift people out of poverty.
I would not be surprised if the first ever ‘Employee Free McDonalds' will be in operation within the next five years.
But at least someone, somewhere, will be getting $20 an hour, right?
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