In January of this year, the state of California raised the minimum wage to $16 per hour, but this wasn’t good enough for some union leaders and the politicians they own in Sacramento. The Service Employees International Union (SEIU) has been trying to organize fast food workers but has failed, so they hatched a plan to save their organizing effort.
The SEIU has a strong lobbying presence in Sacramento; in 2023 they spent $2.3 million for what CalMatters, a nonpartisan and nonprofit news organization, says includes an “impressive string of wins this year, some of which only surfaced in the past few weeks: Bills to increase the number of guaranteed sick days, raise the minimum wage for health care and fast food workers, allow legislative staff to unionize, and make striking employees eligible for unemployment insurance, a benefit long on labor’s wish list.”
The major chain fast food places carry the logo of many nationwide brands, but they are owned and operated by thousands of small business owners known as “franchisees.” These folks usually own a few locations and employ entry-level workers to serve their customers. Anyone who operates a restaurant of any size knows that the profit margin for these operations is very narrow.
For weeks now, the government propaganda machine has been crowing about the new $20 an hour minimum wage for major brand fast food workers. The folks who would have benefitted from the raise were busy using their calculators to figure out what their new weekly income would be. Of course, they didn’t anticipate how the location owners would react to the new increases in operating costs.
This new mandate was hatched in top secret meetings, which included the SEIU, politicians, and Capitol staffers. Each was required to sign a nondisclosure agreement prior to participating. Public comment was not included during these meetings.
As for the politicians, they gave little thought to the collateral damage this change would cause. Why, because when you raise the entry-level wage you also must increase other wages, such as cooks’ and managers’, to retain experienced employees. In addition, other food establishments that aren’t part of a national chain must increase wages to keep their employees.
Slow-thinking politicians and a governor who has never had to worry about struggling to meet his monthly expenses for a house or food for his family thought that “big business” would shrug this off and keep on flipping burgers and slicing pizza.
But on April 1, aptly named April Fool’s Day—this year in honor of the politicians who thought this idea up—workers at numerous locations across the state got a shock when they reported for work.
In most cases their hours were cut, thus they really didn’t get a raise in weekly pay at all. In others, staffing was reduced as workers are being replaced by automated ordering systems and/or kitchen appliances. And in other cases, the locations were simply closed, never to reopen again.
For customers, the menu prices were increased to accommodate the increased cost of labor. Many of these locations are in low- to medium-income neighborhoods where folks can ill afford any increase in food costs. Now treating the family to a fast-food outing is going to be out of the question for both the newly enriched fast-food workers and the people they had served.
A conspiracy theorist would think that this was a mean trick played by SEIU leaders to punish an industry that they have had trouble organizing. In the process, all they did was hurt the very people they were trying to “help” because it was these folks who either lost their jobs or had their hours reduced and then had to pay more for a meal if the location stayed open.
Following this increase, the media interviewed several franchise owners; many said that they were either suspending any expansion plans, closing their locations, or were shifting their expansion plans to adjoining states where the business climate is friendlier.
The bottom line here is that the political class, especially of the liberal/progressive mentality, just can’t comprehend how businesses work. First a person must invest large sums of money to open any type of manufacturing or commercial enterprise. Then they must hire and retain qualified employees to make or sell their products.
For this investment, they expect some level of return (aka profit) so they can keep up with technological changes or expand the business and hire more employees. And the employees are paid so they can pay the rent, feed their families, and buy their kids clothes for school.
Another thing the political class doesn’t understand is that businesses don’t have an infinite cash flow. Just because the government mandates an increase in the hourly wage doesn’t mean that companies can absorb those cost increases.
And now national media is reporting that “a fair wage advocacy group is demanding that California’s new $20 minimum wage law for fast food workers be extended to all sectors to help working-class people who are struggling with the state’s high cost of living.”
No one ever gets ahead when the government steps in to help; these actions will only increase the cost of everything you buy.
Ron Fink writes to the Sun from Lompoc. Send a letter for publication to [email protected].
