Fast food chains in California are slashing jobs - as a way to cut costs after the minimum wage in the state was hiked to $20-an-hour.When the minimum wage is raised for entry level workers those with more experience who had already been getting $20 an hour must have their pay raised as well, and this is just unsustainable for businesses working on thin profit margins.
Almost 10,000 positions across chains from Pizza Hut to Burger King have been cut since the law came into effect on April 1, according to a report from a trade group in the state.
On top of that, chains have been shuttering restaurants - including beloved Mexican chain Rubio's Coastal Grill, which this week filed for Chapter 11 bankruptcy and closed 48 locations in the state.
The solution for employers is to raise prices, which means less business which means workers will eventually get laid off, or keep prices stable and lay off workers more quickly. Either way, it's hard to see how raising the minimum wage helps most workers.
The California Business and Industrial Alliance (CABIA) slammed Governor Gavin Newsom for pushing the law through, which has also meant businesses in the state have had to raise prices.A worker's worth is based on how difficult it would be to replace him or her. If a job takes no particular skill politicians can't artificially inflate the worker's value to his or her employer simply by raising the worker's salary by legislation. This placebo may make the politicians popular with the uneducated, but it guarantees that the workers who are supposed to be helped will only suffer in the long run.
To highlight the impact of the law, the trade group created out an advert in Thursday's edition of USA Today with mock 'obituaries' of popular brands.
The tongue-in-cheek advert (which can be seen at the link above), titled 'In Memoriam: Victims of Newsom's minimum wage', highlighted the issues faced by smaller brands including Rubio's, and fast food giants including Pizza Hut, Burger King, Subway and McDonald's.
It features news clips documenting the changes made by companies in response to the wage increase.
This includes raising prices, letting go of workers to cut labor costs - and in some cases shutting down locations.
One says: 'A McDonald's franchisee who owns 18 outposts in California is considering reducing store hours, hiking menu prices and delaying renovations to offset the impact of the state's $20 hourly minimum wage for fast-food workers.'
Even before the law was made official earlier this year, chains including Pizza Hut and Round Table let go of more than a thousand delivery workers to brace for the financial ramifications of the change.
One of the details in the article at the link explains that many franchises are planning to replace workers with digital kiosks, a trend that has already started in many restaurants. The kiosks cost money and would've been slow to displace workers had politicians, ignorant of basic economics, not made kiosks more attractive than training and paying workers more than they're worth to their employer.