The restaurant industry looks like a very different place than a few short years ago on multiple levels. The first, most immediate issue: minimum wage rises this month in at least 23 states and will impact fast-food workplaces more than most. Secondly, rising union activity could increase closures of restaurants, which were previously thought to be harder to organize for multiple factors including higher turnover.
The labor laboratory of California is acutely feeling both struggles, given that the state boosted overall minimum wage to $15.50 on January 1, which has naturally increased food service costs. None of this bodes well in an industry that still struggles to regain a foothold in the ongoing pandemic. Yet that’s not the whole story.
A hiccup on the minimum wage front: California’s Fast Food Accountability and Standards (FAST) Recovery Act, or Assembly Bill 257, had also been scheduled to go into effect January 1. The law structures itself around a Fast Food Council that would directly bargain with employers without union votes and would install a $22 minimum wage for workers of most fast-food chains in the state. The bill currently sits on pause.
The hold, however temporary, went into effect after a judge issued an injunction that will be reevaluated in mid-January. This push-and-pull effect is real, since industry leaders from chains including McDonalds and Chick-fil-A are pushing for a referendum that would put FAST into voters’ hands, way down the line in November 2024.
The term “buying time” rarely sounds so apt on both sides, although it remains to be seen whether the injunction would be extended to last that long.
Whatever happens here, a key takeaway exists: whether FAST succeeds or dies, California trends influence the rest of the U.S. As such, copycat legislation is still in the works in multiple states. Meanwhile back in California, the FAST roadblocks prompted workers to strike, which was probably to be expected.
After all, Gavin Newsom had signed the bill into law despite industry leaders’ concerns. Their argument: an overnight, dramatic wage boost will cause financial harm that restaurants may not be able to withstand and remain open. This will disproportionately impact franchise owners and likely lead to lost jobs, obviously not to the benefit of members of the SEIU, which propelled the bill in the first place.
The ongoing shuttering of restaurants also looms large in the background: Starbucks has continued to permanently close the doors of locations that it has deemed “not profitable” or that are plagued with safety concerns. This has, of course, prompted NLRB accusations that these closings are deliberate and retaliatory, since some of these closures take place where workers filed for union votes.
Yet Starbucks isn’t alone. Casual food restaurants including Chipotle recently shut down locations where workers are organizing. The company argues that this is happening over staffing shortages.