Once again, California’s progressive lawmakers have sparked controversy by enacting legislation for very low-income people they claimed to be helping.
Their latest measure, a new law, is poised to result in the termination of employment for thousands of minimum-wage workers.
California has once again demonstrated the truth behind Ronald Reagan’s famous quip that the most terrifying words in the English language are “I’m from the government, and I’m here to help.”
Understanding economics has consistently been a challenge for liberals. In deeply Democratic California, the recent approval of Assembly Bill 1228 has mandated a sudden and significant increase in the minimum wage, up to $4 an hour, for select fast-food establishments. However, instead of improving lives as intended, this move is backfiring by resulting in job losses for many.
As highlighted by CNBC, California, home to over half a million fast-food workers, now faces the risk of many of these individuals losing their jobs.
This month, California’s implementation of a new $20-per-hour minimum wage for the fast-food industry has brought significant changes. In response, business owners are installing additional electronic ordering devices and cutting back on costly human employees.
The recent wage increase comes on the tail of the devastating COVID shutdowns, which wreaked havoc on the restaurant industry, leading to sharp declines in profit margins. Just as California’s restaurants were beginning to recover, the left-leaning legislature burdened them with this new wage law.
Burger King franchise owner Harsh Ghai’s cautionary statement hits the mark: Ghai revealed that the expensive new wage law has compelled him to devise a strategy to install electronic ordering kiosks across his 140 locations within two months, as reported by Business Insider.
Ghai went so far as to highlight that prices for fast-food customers have surged by eight to 10 percent in the past year, compared to their typical annual increase of about three percent. He emphasized that the new wage law will further exacerbate this issue.
“The majority of that is going to get absorbed in the inflation of our food costs,” he said of the higher costs the state is imposing on restaurants. “So we’re not even compensating for most of the labor costs that we’re going to be experiencing with this legislation.”
Ghai also mentioned that the increased prices, which were already in place before the additional staffing costs hit business owners, are driving customers away. Therefore, rather than further raising prices, the simplest solution is to reduce the number of employees.
The businessman further stated that he has reassessed his plans to gradually introduce electronic self-ordering kiosks across his 140 locations over a 10-year period. Instead, he will now expedite the process and implement it within a matter of months.
“We are just going ahead and installing the kiosks in every single restaurant in response to the legislation to be able to balance some of these labor costs that are hitting us,” he said.
“We can’t move fast enough on this,” Ghai told Business Insider.
“We’ve done the financial analysis and it makes more sense for us to spend the capital expenditure on the technology, and obviously when you’re buying large amounts of the hardware, you obviously get it for a cheaper price as well,” he added.
“So it’s making more sense for us to just roll that across the business in its entirety,” he said.
Other restaurant chains have responded by firing hundreds of employees. A large number of pizza chains in California immediately fired their delivery drivers earlier this year after the law passed, including Pizza Hut and Southern California Pizza Co. stores in the state.
Many restaurants have opted to shut down rather than struggle to barely scrape by due to the increased costs imposed on them.
Other restaurants are considering strategies to operate in locations without eating areas and cashiers altogether. For example, Chick-fil-A is experimenting with “grab and go” locations, where customers exclusively order online or via an app and retrieve their orders at a drive-through without any cashiers or eat-in facilities.
California’s far-left legislature is not only driving up costs for every fast-food customer but also leading to tens of thousands of job losses. The legislature’s actions are achieving the opposite of their intended effect.
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