California’s recent leap to a $20-an-hour minimum wage for fast-food workers has quickly revealed its unintended but predictable consequences.
Governor Gavin Newsom’s progressive push, aimed at improving worker conditions, has instead triggered a domino effect of cutbacks, closures, and potential exodus of businesses from the Golden State.
A new survey by the Employment Policies Institute paints a grim picture of the law’s impact.
Of the 182 fast-food companies polled, a staggering 89% have already slashed employee hours.
This comes less than a year after the bill’s passage, suggesting the real pain may be yet to come.
The numbers tell a sobering story:
- 70% of businesses have reduced staff or merged positions
- 75% have limited overtime and extra shift opportunities
- 67% expect costs to rise by $100,000 per location
- 93% plan to hike menu prices
These aren’t just statistics; they represent real people and livelihoods.
Take the iconic Arby’s on Sunset Boulevard in Hollywood. After 55 years of serving roast beef sandwiches, it shuttered its doors in June.
Owner of the shuttered Arby’s in Hollywood
Democrat policies killed this man’s family business owned for decades .. he doesn’t say that specifically but it’s true pic.twitter.com/h9ZUDFrbjV
— Make L.A. Great Again 🇺🇸 (@lalovestrump) June 18, 2024
The 91-year-old owner, Marilyn Leviton, told KTLA, “Truth is, I think it was the pandemic that did us in.”
But Newsom’s wage hike seems to have been the final straw for many businesses already on the brink.
The ripple effects extend beyond just job losses. As one fast-food operator put it, “We’re not just cutting hours; we’re cutting dreams.”
Many workers relied on overtime and extra shifts to make ends meet. Now, those opportunities are vanishing, potentially leaving workers worse off despite the higher hourly rate.
The irony is palpable. A law meant to boost worker pay may end up shrinking paychecks and eliminating jobs altogether.
It’s a classic example of how heavy-handed government intervention can backfire, hurting the very people it aims to help.
But the damage doesn’t stop at California’s borders.
The survey found that 89% of fast-food companies are now less likely to expand within the state. Even more alarming, 59% are eyeing expansion opportunities outside California.
This exodus could lead to a broader economic downturn, as businesses seek friendlier climates for growth.
The consumer isn’t spared either. With 98% of restaurants reporting higher menu prices, Californians can expect to pay more for their burgers and fries.
As one respondent noted, “We can’t absorb these costs. They have to be passed on.”
This price hike could lead to reduced foot traffic, creating a vicious cycle of declining sales and further cutbacks.
Perhaps most concerning is the long-term outlook.
A whopping 74% of fast-food operators say they’re more likely to shut down their California locations entirely.
This isn’t just about losing a convenient place to grab a quick meal; it’s about community anchors disappearing and entry-level job opportunities vanishing.
READ NEXT: Regional Home Goods Retailer With 550 Stores, 3,300+ Employees Files For Bankruptcy, Plans to Shut Down
As California’s fast-food industry council prepares to meet next week, they’ll face a landscape drastically altered by AB1228.
The full impact of this wage hike experiment is still unfolding, but early indicators suggest it may be a recipe for economic indigestion.
