2024 Election

Gavin Newsom’s $20 minimum Wage Hike Leads to Mass Lay Offs in California

California Governor Gavin Newsom’s recent enactment of a $20 minimum wage for fast-food workers has ignited significant debate and led to a series of preemptive layoffs across the state.

While the law aims to uplift workers’ earnings, its economic ramifications are drawing scrutiny, particularly from business leaders and conservative economists.

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According to the New York Post:

California fast food restaurants have slashed nearly 10,000 jobs because of the state’s new $20 minimum wage as struggling franchises cut labor costs and raise prices to survive, a major trade group said Thursday.

The California Business and Industrial Alliance (CABIA) slammed Democratic Gov. Gavin Newsom for pushing through the law, which went into effect April 1 – and was blamed for forcing one beloved taco chain to shutter 48 locations in the state last week.

“California businesses have been under total attack and total assault for years,” CABIA president and founder Tom Manzo told Fox Business.

“It’s just another law that puts businesses in further jeopardy.”

Several major chains – including McDonald’s, Burger King, and even low-cost favorite In-N-Out Burger – jacked up prices to offset the higher wages.

Many had to cut employee hours and some have expedited a move to automation.

Manzo said nearly 10,000 jobs have been cut across fast food restaurants since Newsom signed California Assembly Bill 1287 into law last year, adding that officials were living in a “fantasyland” by thinking that drastic wage increases will help workers or businesses.

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Since Governor Newsom signed AB 1287 into law, which took effect April 1, nearly 10,000 people in the restaurant industry have lost their jobs.

“California businesses have been under total attack and total assault for years,” said Manzo. “It’s just another law that puts businesses in further jeopardy.”

A number of well-known restaurants, such as McDonald’s, Burger King, and even the Golden State’s famous burger chain In-N-Out Burger, had to raise prices to make up for the increased pay. Many were forced to reduce employee hours, and some transitioned to automation, per the New York Post.

“You can only raise prices so much,” said Manzo. “And you’re seeing it. People are not going to pay $20 for a Big Mac. It’s not going to happen.”

Manzo also called fast food “a starter industry” and explained that it was never meant to be a long-term, high-paying job.

“You get a job as a kid working in a fast-food restaurant and you learn some good work ethic and that takes you into life,” he said.

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The first big chain to be affected by the new regulation was Rubio’s California Grill, which is well-known for its fish tacos. At the end of May, just one month after the law took effect, 48 of its approximately 134 sites were closed.

The closures were attributed to the state’s “increasing cost of doing business.”

On Wednesday, the chain filed for bankruptcy.

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Fosters Freeze, another fast-food chain, closed its Fresno location, citing financial difficulties in having to pay employees higher wages.

According to a recent report from Kalinowski Equity Research, Taco Bell raised menu prices by 3 percent and Starbucks added 50 cents to every menu item since the law took effect. 78 percent of consumers now view fast food as “luxury” purchases because of how pricey the meals have gotten, per a recent Lending Tree survey.

As California moves forward with the implementation of this landmark legislation, the state will serve as a critical case study in balancing labor rights with economic viability. The outcomes will likely influence future policy decisions both within California and across the nation, as other states observe the effects of such significant wage adjustments.

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Ella Ford is a mother of two, a Christian conservative writer with degrees in American History, Social and Behavioral Science and Liberal Studies, based in the Tulsa, Oklahoma area.

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