California’s new minimum wage hike has not even gone into effect and it is already costing the jobs of the very people it was supposed to help.
The Democrat-dominated state Legislature passed Assembly Bill 1228 in September and Gov. Gavin Newsom quickly signed it into law. The law raises the minimum wage for fast food workers from $15.50 to $20 an hour and is scheduled to take effect in April.
As the bill was being debated, then pushed through into law, many restaurant owners warned that the wage hike would result in higher prices for customers.
Now, those warnings have come to pass.
Hundreds of Pizza Hut locations in California have announced that they will be phasing out their delivery services and more than 1,100 workers will lose their jobs, the Los Angeles Times reported.
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Federal and state filings from the two franchise owners who run the locations said they “made a business decision to eliminate first party delivery services and as a result [eliminate] all delivery driver positions.”
The restaurants will now rely on third-party delivery services such as Grubhub and DoorDash. This will necessarily mean higher prices for consumers.
Pizza Hut franchise owners are not the only ones reacting to the new law.
“Chains such as Chipotle and McDonald’s said they planned to pass the costs of higher wages in California to customers by raising menu prices,” Business Insider reported.
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According to the outlet, restaurant industry analyst Mark Kalinowski said he expects “more harm to come” as fast food restaurants “take action in an attempt to blunt the impact of higher labor costs.”
Californians can’t say they weren’t warned.
After AB 1228 was passed in Sacramento, the National Owners Association, which represents some 1,000 McDonald’s franchisees, sounded the alarm.
“The new ‘AB 1228’ legislation … will result in a devastating financial blow to California McDonald’s franchisees at a projected annual cost of $250,000 per McDonald’s restaurant,” the organization said.
“These costs simply cannot be absorbed by the current business model.”
According to the New York Post, the wage hike was sold as a way to offset California’s soaring cost of living. Instead, it will cost people their jobs and make it even harder for many Californians to afford eating out.
Laws like these may sound nice to voters who want to be compassionate. And they are often used by politicians to pander to the middle and lower classes.
But they always have the unintended effect of eliminating jobs, making goods and services more expensive, and even driving businesses into bankruptcy and closure.
