Would You Like An Apple Pie With That? No Thanks, I Can’t Afford It

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Did that first Big Mac, large fry and large Coke of 2023 cost the same as they did in 2022? If so, thank a judge.

Less than two days before California’s Fast Food Accountability and Standards Recovery Act was to become law – on Jan. 1 – Sacramento Superior Court Judge Shelleyanne W.L. Chang placed a hold on the legislation, temporarily restraining the state “from implementing, enforcing, or taking any other action to effectuate Assembly Bill 257.” The matter will be taken up again by the court on Jan. 13.

Passed in August and signed – fittingly – on Labor Day, AB257 establishes a Fast Food Sector Council that sounds uncomfortably Gramscian. It will be made up of 10 members who are appointed by the governor, Assembly speaker, and the Senate Rules Committee. This group “would prescribe” its own powers.

Working from within the state Department of Industrial Relations, the council’s mission is to “promulgate minimum fast food restaurant employment standards, including standards on wages, working conditions, and training, and to issue, amend, and repeal any other rules and regulations.” Its authority is unprecedented.

Though the text of AB257, also known as the FAST Recovery Act, doesn’t directly address employer-employee negotiations, there’s no reason to believe the government won’t be a party to future labor talks, sitting on the side of workers. Or maybe the administrative state will bypass that process and autocratically, as the San Francisco Chronicle reports, “raise standards of employment at fast-food restaurants and create a minimum wage for the fast food sector as high as $22 per hour in 2023, with capped yearly increases.”

Unless the lawsuit, filed by an industry group made up of limited-service restaurants, is able to shut it all down. The plaintiffs want the court to set aside enforcement and move ahead with a referendum on the 2024 ballot that would repeal the FAST Recovery Act if approved. ​​The Save Local Restaurants Coalition says its proposal already has enough signatures – more than 1 million – to qualify. The Secretary of State’s office says it will determine if the proposal has reached the required number of valid signatures sometime this month. Under state, state laws that are subject to a referendum are suspended until voters cast their ballots.

Meanwhile, the unions have been sure they have a win in their column. The AFL-CIO called AB257 “​​a big step forward for California fast-food workers,” while the SEIU said the legislation is a “historic victory for working people” that will “give voice to more than” a “half million fast-food workers.”

Organized labor never acknowledges the big picture, though, only the tightly focused snapshot of union bosses stuffing their wallets. Like Assembly Bill 5, AB257 was not passed for the benefit of workers but to increase union membership. With the possibility of a $22-an-hour wage across the industry threatening restaurants’ finances, “suddenly, collective bargaining looks so much better than it did before the bill was signed into law, but only because the new law makes running a non-union business remarkably more expensive,” says UCLA economist Lee Ohanian.

Forget the claims that AB257 will raise wages for the poorest workers. A few will see their incomes rise, but any wage increase will have the same effect as a minimum-wage hike – many workers will be forced to accept the real minimum wage, which is zero. A government-demanded increase in the cost of doing business will mean fewer jobs, a suspension of business aspirations, a curb on innovation and sclerotic economic growth.

AB257 will also hurt the poor in the place way the minimum wage does: in their pockets. The University of California Riverside’s School of Business Center for Economic Forecasting and Development says that if worker compensation increases by 60 percent at limited-service restaurants, prices “would increase between 20% and 22%.”

The law will also discourage franchisors from increasing their presence in California. We should expect that some will close their operations in the state rather than becoming more involved in running franchises, which they would have to do to avoid the added liability clapped on them like handcuffs by AB257. At the same time, franchisees are likely to join the business flight from California, relocating in states where they are regarded as assets rather than villains who are to be punished on a regular schedule.

Now back to that McDonald’s order: Prices might not have changed yet, but if the lawsuit against the FAST Recovery Act or the subsequent referendum fails, they will. For more than a few of us, those large items will then be downsized to medium, or small, filled by organized workers who are being paid more than they had been but whose jobs have been made more difficult since many of their coworkers had to be let go.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.


Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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