Thousands Forced Out of Work Following Newsom’s Wage Hike

By: David Donovan | Published: Jun 11, 2024

Since Gov. Gavin Newsom increased the state’s minimum wage to $20, thousands of people have lost their jobs and have been forced to pay inflated menu prices. 

This has had a significant impact on the fast-food industry in California as workers bear the brunt of the fallout.

CABIA Input

The California Business and Industrial Alliance (CABIA) President Tom Manzo explained why organizations are “fed up” with California’s policies during “Fox and Friends”. 

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pizza on white ceramic plate with other fast food items, drinks and salad.

Meanwhile, Americans struggle to bear the cost of the product that is presently thought to be a “luxury item” by certain shoppers.

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Manzo’s Opinion

“The biggest issue California faces is continued increased cost and a continued anti-business climate,” according to Manzo. 

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fried chicken on paper bag, there are tongs reaching for the fried chicken

Unsplash user Brian Chan

He went on to say: “That’s why we decided to run this ad in the first place, and… business owners are fed up… Quite frankly, it’s having a ripple effect now on everybody.”

Mass Layoffs

CABIA said almost 10,000 positions have been cut across fast food eateries since Newsom introduced California Assembly Bill 1228 into law last year. 

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burger with fries on a wooden surface

Unsplash user Jonathan Borba

CABIA has published an advertisement with mock “obituaries” of popular fast food brands in Thursday’s statewide edition of USA Today to highlight what it claims are the law’s unintended consequences.

Spreading Awareness

CABIA’s promotion features various eateries that have needed to raise costs and lay off laborers to remain above water and, at times, shut down stores. 

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Fries coming out of a paper Burger King packet

The promotion highlights news clips recording changes made by brands like El Pollo Loco, Subway, and Burger King across the state.

Need for Change

“That’s why we continue to advocate because legislators, the governor, they need to wake up,” Manzo said. “You cannot be this anti-business.”

burger sandwich and potato fries on brown wooden surface with two dips

Unsplash user Pixzolo Photography

“We’re going to continue to fight,” he continued. “We advocate for small to medium-sized businesses, people that don’t have a voice… We need to change the direct trajectory, and that’s what we’re going to do. That’s our mission.”

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Newsom’s Rebuttal

The CABIA’s claims that there would be a loss of fast-food jobs were disputed by Newsom’s office. 

Gavin Newsom with President Biden while Secret Service and other aides are in the background.

X user GavinNewsom

According to the governor’s spokesperson, the U.S. Bureau of Labor Statistics showed that limited-service restaurants added 4,500 jobs in California between September 2023 and April 1, and from April 2023 to April 1, 6,600 new fast food jobs were created.

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Luxury Expense

Due to high prices, nearly eighty percent of Americans now consider fast food to be a “luxury” expense. 

fried chicken with salad, fries and dips on brown wooden round plate

Unsplash user Farhad Ibrahimzade

Menu prices have also increased as a result of the wage increase. 68 % of respondents to a survey conducted by LendingTree are in agreement that the prices of fast food items are excessive.

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Minimum Wage Concerns

During “Fox & Friends First,” Restaurant Business Magazine editor-in-chief Jonathan Maze refuted the notion that the minimum wage increase benefits workers, citing concerns regarding the timing and severity of the increase.

sandwich and fries on tray with other fried food and a coca cola

Unsplash user Khalid Boutchich

Maze stated, “It’s a tough thing to do. You got two issues. You have the fact that it was done almost overnight. You have the fact that it was a 25% increase in the wage rate. Both of those things, happening simultaneously, is a really hard thing for restaurants”

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Affordable Reputation

That’s what Maze contended because costs have inflated, and Americans are eating out once in a while compared to before as it keeps on influencing the business’ “reputation” as a cheaper choice for everyday families.

Exterior of McDonald’s at night time with cars parked outside and lights on.

Unsplash user Shahbaz Ali

Maze stated, “This has been a challenging environment. If you looked at what McDonald’s had reported just a couple of weeks ago, their prices are up 40% since 2019.”

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Maze’s Interpretation

According to Maze: “Their costs are up since 2019. You had, right after the pandemic… a dramatic increase in food costs. You had a dramatic increase in labor costs.”

fries and burger on white ceramic plate with salad and slaw to the side and fried chicken.

Unsplash user Mustafa Bashari

He went on to say, “Insurance costs are up. Lending rates are up. Everything costs a lot more. Construction costs are up, and that requires companies to increase prices.”

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Hiring Freeze

Now that companies are struggling to pay their employees many fast-food companies have placed a hiring freeze and have announced mass layoffs.

burger with cheese and vegetable on a stainless steel tray with fries as a hand dips a fry in sauce

Along with a high tax and cost of living the latest in government policies is putting a strain on businesses.

In increasing the minimum wage Newsom has caused division amongst political commentators who struggle to see the rhetoric in causing such a dramatic shift.

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