In anticipation of the 25 percent escalation of the minimum wage for their workers in California to take place next Monday, fast-food outlets throughout the county have already begun laying off workers en masse. It is anticipated that thousands more of those in that sector within San Bernardino County will be out of work by May.
The trend in the loss of jobs is an unwelcome manifestation of the move to increase pay for workers traditionally considered to be at the bottom of the pay scale in the Golden State.
On April 1, workers in that part of the restaurant industry providing what is defined as fast-food, will see their pay jump by $4 – a substantial 25 percent – from $16 to $20. For franchises and the companies themselves – McDonald’s Jack in the Box, Burger King, In-N-Out, Taco Bell, Del Taco, Baker’s, Wendy’s, Kentucky Fried Chicken, Church’s Chicken, El Pollo Loco, Juan Pollo, Chick-Fil-A, Popeyes, Arby’s, Panda Express, Subway and others of that nature – the expense of rising minimum wages is one they are already staggering under.
Under the law, fast-food operations were considered to be part of the remainder of the economy, subject to the same conditions, vicissitudes, regulations and wage rules as all other businesses. Over the years, the minimum wage has escalated in California. On March 1, 1997, the minimum was $5.00. As of September 1, 1997 it grew to $5.15. As of March 1, 1998 it rose to $5.75. As of January 1, 2001 it became $6.25. On January 1, 2002 it reached $6.75. Upon January 1, 2007 it climbed to $7.50. On January 1, 2008, the minimum wage stood at $8.00. On July 1, 2014, workers could be paid no less than $9.00 per hour. That minimum was raised to $10,00 on January 1, 2016. As of January 1, 2017, it became $10.50. A slight bump to $11.00 came on January 1, 2018. On January 1, 2023, the state minimum wage leapt to $15.50. A relatively minor increase to $16 per hour went into effect on January 1 of this year.
In 2021, discussion about taking restaurant workers to a starting pay grade beyond that of other workers first began, under the auspices of the Fast-Food Accountability and Standards Recovery Act, dubbed the FAST Act, contained in legislation, Assembly Bill 257, that was sponsored by four Democrats – Assemblyman Chris Holden, Assemblywoman Wendy Carrillo, Assemblyman Evan Low and Assemblywoman Luz Rivas.
There was solid, indeed virulent, opposition raised to the FAST Act. One of the things that proponents of the higher minimum for fast food workers were missing, it was said, was that many of the jobs at places like McDonalds or Burger King were entry level, not just entry level at the particular location where the worker was employed but entry level into the workforce all the way around. These were jobs that were very simple ones requiring only minimal skills and training. No college degree was required. Indeed, no high school diploma was needed. There were virtually no prerequisites beyond being able to report to work, more or less on time, and, perhaps, speak English, and in some cases even that was not required. Traditionally, many fast-food workers were high school students working part time at what would be for most his or her first job.
With the FAST Act, a new era was initiated in which fast-food workers had a somewhat unique niche cut out of them, one in which, as of next Monday, will put them into a situation which they will have a starting position – in terms of their starting wages – one fourth greater in terms of pay, then beginning workers in other industries. Even the least experienced and skilled of workers employed with fast-food operations will make 125 percent of what their inexperienced and newly hired counterparts with companies otherwise will be making. That is, if they still have their jobs.
To make up for the increase in pay to their workers, many or most fast food outlets have incorporated a series of alterations to how they conduct business to minimize their need for workers. This has included having fewer workers per shift, which has force the workers remaining with the companies to increasingly multi-task, by waiting on customers and then prepare the meals ordered, run cash registers, deliver or hand over the food to the customers on the premises and then bus tables and carry out custodial chores. Moreover, many companies, such as McDonalds and Taco Bell now discourage customers from ordering from manned operation counters and have instead vectored them to electronic kiosks where the orders are taken without any need for human interaction, further eliminating the need for employees. Virtually all fast-food operations have sought to automate certain jobs formerly carried out by human workers to some degree.
With fast-food operations having now been efficientized to offset the rise in the minimum wage to $16 per hour, the prospect of now having to pay workers $20 per hour at a minimum is threatening to undo fast-food kitchens in California entirely.
The sole remaining remedy beyond further drastic employee cuts, which may prove to be no remedy at all, is to increase menu prices. Doing that, however, is likely to result in a loss of revenues, which could threaten the continuation of the operations in question as going concerns.
Accordingly, the Sentinel has learned, McDonald’s, Popeyes, Jack in the Box, Del Taco and In-N-Out locations in San Bernardino County have initiated layoffs, with indications they will continue and extend to Burger King, Wendy’s and Taco Bell by next week.
In pushing for the passage of the Fast-Food Act, many fast-food workers and their family members had held public demonstrations in which they carried placards, pickets and signs emblazoned “Stand With Fast Food Families Pass AB 257.”
Symbolically, Governor Gavin Newsom had signed Assembly Bill 257 on Labor Day 2022, stating at the time that it would raise the minimum wage for franchise restaurant workers as high as $22 by the following year. That goal was not achieved, but the Fast Recovery Act created a council of workers, corporate representatives, franchisees and state officials with a mandate to set minimum industry standards on wages, working hours and other conditions for fast-food workers statewide. The council, which was weighted in favor of labor rather than franchise holders or corporations, was at liberty to increase wages or keep them the same. Since that commission has come into existence, the minimum wage for fast-food workers has increased from the $11 per hour it was on December 31, 2022 by more than 45.45 percent to $16 per hour today and will undergo another 25 percent bump to $20 next week.
The intent on the part of Holden, Carrillo, Low and Rivas was to bolster the power of workers who had no real recourse for rampant wage theft, poor pay and poor or unsafe conditions in the workplace. Now, however, with franchises and corporations firing and laying off employees they can no longer afford, many of the former placard-carrying workers and their family members are cursing Holden, Carrillo, Low and Rivas as they find themselves or their breadwinners out of work.
Efforts by the National Franchise Association and the National Restaurant Association in the aftermath of the passage of Assembly Bill 257 to prevent the commission from getting carried away with what its labor-representing members considered to be reforms were less than successful.
At this point, both fast-food restaurant owners and many of those who remain as employees at those establishments are hoping the commission, which has the virtually unchecked authority to raise the minimum hourly wage for fast-food workers or not raise the hourly rate as it collectively sees fit, will choose to take a more moderate approach going forward.
The FAST Act is applicable to employees with fast-food restaurants featuring at least 100 locations nationally.