(Editor’s note: So often legislation is passed and signed by the governor, or voters approve a ballot measure, but the discussion drops off the radar. This column will look at the laws and let readers decide if they are helping or failing.)
FAST FOOD JOBS AND MINIMUM WAGE
California Gavin Newsom signed AB1228 (Fast Food Franchisor Responsibility Act) into law in September 2023 and it went into law April 2024. All fast-food restaurant employees needed to be paid at least $20 an hour, which translates to an annual salary of $83,200.
If a fast-food chain had at least 60 establishments nationwide and more than 50 percent of the restaurants gross income comes from customers eating or drinking at a table inside or outside the establishment or their car or “to go,” they must pay the $20 per hour wage.
The exception? Panera. An exception in the law was made for fast-food restaurants that operate a bakery that “produces” and then sells “bread” as a stand-alone menu item as of September 15, 2023. “Bread” is defined as a single unit item that weighs at least one-half pound after cooling and must be sold as a stand-alone item.
According to Sacramentos’ KCRA Channel 3, “Multiple sources who spoke on condition of anonymity have confirmed to KCRA that billionaire franchisee and Newsom donor Greg Flynn influenced Newsom’s push to carve out chains that sell and make bread on-site from the new law in the final weeks of the legislative session in 2022.
In March 2024, Newsom also signed AB610, which exempts additional restaurants in certain locations from AB1228. Thus, fast food restaurants located in museums, airports, theme parks, gambling establishments, hotels, event centers, or corporate campuses (all as defined further by AB610) are now also exempt from AB1228.
Newsom argued that the minimum-wage law would not have ill effects, but “the latest quarterly report from the Bureau of Labor Statistics shows an unambiguous decline of 4,256 fast food jobs through June since the fast-food minimum wage rose from $16 to $20 per hour at the start of April.”
Employment Policies Institute (EPI) wrote that “Since the passage of AB1228 in September 2024, California’s privately-owned fast food restaurants have lost 6,166 jobs through June 2024. Over the same period the previous year prior to the passage . . .California gained 17,528 private sector fast food jobs.”
According to Snappy* there are “1,030 fast food restaurants that have permanently closed since April 1, 2024, in California (315 closed in California prior to the minimum wage increase). The website concluded that even with fewer restaurants there was an increased number of fast-food jobs.
A Subway Franchisee wrote about the difficulties of keeping a store open with mandates passed by the legislature and Governor Gavin Newsom.
In a Sunday, December 15 letter to the Los Angeles Daily News, Angel Mendez who owns one Subway franchise, spoke about how when he was 11, he migrated to the U.S. from Mexico. After high school he worked in a Subway. “After 15 years of working and saving, my wife and invested everything to buy a Subway franchise in 2002.”
He continues to make an argument against mandates on franchisees. “Our small businesses can’t endure more costs. . . .we’re operating on razor-thin margins.
“I’ve had to raise my prices six percent and cut each of my employees hours about five hours a week.” Mendez said he used to have five employees per shift and now it is typically one or two. Either he or his wife and daughter fill in the gaps.”
Arguments for and against a minimum wage include: 1) people need to make a working wage; 2) these jobs are not meant to be a profession, but rather a steppingstone to other employment; 3) these jobs are meant for first time hires such as teens, who are able to get work experience; and 4) some prices have risen at fast food eateries, 4) employers have cut the hours of many employees.
One error… $20 per hour does not translate to $83K per year. It’s actually less than half that.
Otherwise, love the reporting and keep up the good work!
“California Gavin Newsom signed AB1228 (Fast Food Franchisor Responsibility Act) into law in September 2023 and it went into law April 2024. All fast-food restaurant employees needed to be paid at least $20 an hour, which translates to an annual salary of $83,200.”
The actual annual salary is $41,200 for a forty hour week with no overtime. (20 X 40 X 52)