Newsom Signs Fast Food Bill Into Law Raising Min. Wage; Industry Heads Expect Consumer Prices To Increase

California Governor Gavin Newsom observed Labor Day by signing a new bill into law Monday that could raise minimum wages for more than half a million fast food workers after forcing restaurants across the state to close their doors during the pandemic.

The Fast Food Accountability and Standards Recovery Act, or AB 257, authorizes creating a 10-member Fast Food Council of labor and management representatives to set new standards like wages, public health and safety conditions, and security measures for industry workers.

Newsom touted singing the landmark legislation claiming it would allow workers to share in the state’s economy.

“Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry,” Newsom said in a statement. “I’m proud to sign this legislation on Labor Day when we pay tribute to the workers who keep our state running as we build a stronger, more inclusive economy for all Californians.”

The nation-leading bill, backed by the Service Employees International Union, only applies to restaurants with 100 or more establishments nationwide, with the exception of restaurants that operate a bakery that “produces for sale bread as a stand-alone menu item.”

Councilmembers could increase the wages to $22 per hour, representing an increase of over 40% from the $15.50 minimum wage slated to take effect next year.

While California lawmakers celebrate the landmark bill arguing it would help build “a world-class economy,” opposing politicians, restaurant owners, and franchisers slammed the legislation arguing the law would have a trickle-down effect on the businesses and consumers.

Joining almost every other conservative senator in the state, Sen. Brian Dahle, who is running as the Republican nominee to replace Newsom for California governor in November, told The Associated Press that the law would only create “a steppingstone to unionize all these workers.”

“At the end of the day, it’s going to drive up the cost of the products that they serve,” Dahle said.

“There are no slaves that work for California businesses, period,” he later added. “You can quit any day you want, and you can go get a job someplace else if you don’t like your employer.”

The Associated Press further reported that a UC Riverside Center for Economic Forecast and Development analysis with industry leaders said the legislation would increase consumers’ costs.

McDonald’s USA President Joe Erlinger denounced the legislation last month, noting that the provisions impose “higher costs on one type of restaurant, while sparing another.”

“If you are a small business owner running two restaurants that are part of a national chain, like McDonald’s, you can be targeted by the bill,” Erlinger explained. “But if you own 20 restaurants that are not part of a large chain, the bill does not apply to you.”

Erlinger postulated that “backroom politicking” could explain the carveout for restaurants with a bakery.

“This is a clear example of picking ‘winners’ and ‘losers,’ which is not the appropriate role of government,” he said.

An analysis from the California Department of Finance said that the legislation introduces a “fragmented regulatory and legal environment for employers” that could “raise long-term costs across industries.”

According to the company’s most recent federal filings, there are more than 40,000 McDonald’s restaurants as of 2021, with 93% of locations constituting franchises.

“This should raise alarm bells across the country,” Erlinger said of the legislation. “But this isn’t just a cautionary tale for California’s customers, workers, and business owners. Proponents of this bill have made it clear they want to see it expand across the country, regardless of whether Governor Newsom signs the bill into law. That would be terrible.”

Ben Zeisloft contributed to this report.

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