California is poised for a dicey labor development amid already rough inflationary times. After much back and forth last year, lawmakers passed AB 1228, which will boost most fast-food to $20 per hour on April 1, 2024. The state legislature, spurred into action by unions, including the SEIU, lauded this bill as boosting wages for 500,000 workers. This legislation may instead have some unintended consequences.
As reality would have it, however, this bill will set many of these workers back financially as businesses struggle to cope with a new financial reality: higher labor costs with little recourse to make up for the added expenses.
Make no mistake, too, the increased costs are substantial. The overall California minimum wage is currently $16 per hour, and the consequences of boosting fast-food workers up to $20 per hour are no joke. Workers are not blind to the plight suffered by their employers, either, and one social media response lamented the situation as such: “The fast food model doesn’t work if you have to charge $20 for a meal.”
Here’s how an estimated 30,000 different restaurant locations – including Chipotle, McDonalds, and Starbucks, along with Taco Bell, In-N-Out Burger, Shake Shack, and more – are buckling down ahead of April 1:
- Pizza Hut is already laying off delivery drivers, with an estimated 1,200 expected to lose their jobs. The chain is expected to refer customers to Grubhub and Uber Eats for delivery options.
- Jack in the Box is planning to boost menu prices by 6-8%, which won’t cover the entire bill for these raises and will undoubtedly lead to falling customer demand and eventually lost jobs.
- Wendy’s, Del Taco, and Carl’s Jr. are leaning into automation by test-driving order kiosks, “salsa processing equipment,” and even drive-thru AI chatbots to offset increased labor costs.
That’s only the beginning of what will add up to a cruel April Fool’s Day when this law goes into effect. Angry workers took their concerns to the California Globe while blaming lawmakers: “I want to tell them who they are hurting.” Another absolved their employer of blame: “I saw how this wasn’t, like, corporate greed or anything. They were just getting squeezed.”
As sad as this whole situation is, this would have been an arguably preventable mess if lawmakers had heeded workers who protested smaller minimum-wage boosts in other states while arguing that they would be hurt in the process. Still, dues-hungry unions persuaded California lawmakers to take this leap into the void, even as workers express fears over layoffs.
Unions will almost certainly try to spin this undesirable outcome by blaming companies for layoffs and using that as an excuse for further organizing efforts. If they are successful, any collective bargaining agreement will supersede AB 1228 and its Council recommendations.
Meanwhile, other states are watching to see if this trend spreads since what happens in California never stays in California. And once unions’ tentacles are in place, removing their influence is hard, which is an overriding reason to nip organizing activity in the bud before it takes root.
