Californians About to Be Served Restaurant Closures with Higher Prices – GV Wire

A bill that would forever change the restaurant industry is being refined ahead of a vote in Sacramento. If it becomes law, it would likely raise food prices through a de facto tax on meals. In an era of high inflation, low- and middle-income families may find themselves a little hungrier than they are today.

Assembly Bill 257, the Fast Food Accountability and Standards Recovery Act, or FAST Act, would launch a “Fast Food Council” that would operate within the Department of Industrial Relations. An analysis by the Senate floor says it “(would establish) minimum industry-wide standards on wages, hours of work and other working conditions related to health, safety and welfare. being fast food restaurants, and providing the necessary cost to live properly”. workers.”

Its 13 members would be appointed by the Governor and the leaders of the Senate and Assembly. Five would be state officials – including the Secretary of Labor and Workforce Development – ​​while the rest of the members would represent fast food workers, the “fast food worker advocates”. , fast food franchisors and fast food outlets. food restaurant franchisees.

Kerry Jackson


In the absence of an existing collective bargaining agreement, the board would act as a union for the employees, the difference being that when a union negotiates with management there are usually concessions from both parties. In this case, the state could dictate the terms of employment to private companies because it has an indisputable power base within the council. The votes of only six council members would be needed to issue a rule.

AB257 would also forever change the franchise model, whose roots date back nearly 300 years to California. Franchisors would be liable for alleged violations committed by their franchisees. It would also invalidate franchise agreements that waive liability.

There are nearly 35,000 franchises (small businesses) in California. Critics believe the FAST Act would discourage franchisors from expanding their presence in the state. Rather than getting more involved in running franchises to avoid liability, some franchisors might even choose to close their California operations. Franchisees could also move to more business-friendly states, contributing to the corporate exodus from California.

A consumer fear of AB257 is its potential to spur inflation. Prices at limited-service restaurants — essentially fast-food outlets — “would rise between 20% and 22%, says the University of California Riverside, School of Business Center for Economic Forecasting and Development, if “worker compensation increases by 60%. ” This could happen if the minimum wage was set at the lower end of the so-called “living wage”, now calculated between 22 and 43 dollars depending on the number of dependants.

Even if fast food prices were to rise only 7%, the low of the UC study’s estimates, they would exacerbate the effects of a high rate of inflation that is already causing hunger among some Americans and added ” enormous stress on low-income households,” says Christopher Thornberg, the study’s author.

“We can expect a very large increase in food costs from affected restaurants, and that could push these families to breaking point,” he says, “given the financial pressures that working families are already feeling due to the higher rents, gas and other necessities”.

Proponents of the FAST Act might argue that higher food prices are an acceptable compromise to improve working conditions and wages for fast food workers. There is no guarantee, however, that AB257 would benefit workers as its sponsors claim.

If the state became the workers’ representative through the council, it would ‘override fast food workers’ freedom of association even more than unions,’ says economics professor Gary M. Wales at Pepperdine University.

The FAST law could also mean a decline in jobs in the fast food industry. While employees who keep their jobs will be better off, higher labor costs for employers “will cause the industry to shrink, with fewer establishments and fewer jobs,” according to Thornberg.

Wishing for higher wages and perfect work environments for fast food workers is understandable. A supporter says that “with AB 257, we would have a more dignified job”. Nothing wrong with that.

But as opponents of the bill have pointed out, there are consequences to forcing the results advocates seek. Many of them look quite gloomy.

About the Author

Kerry Jackson is a Fellow of the Center for California Reform at the Pacific Research Institute.

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