The leftist legislators in California have done it again, making things more difficult for the very low-income people they claimed to be helping, this time with a law that is throwing thousands of minimum wage earners out of their jobs.
As Ronald Reagan used to say, the scariest words in the English language are “I’m from the government, and I’m here to help,” and California has once again proven that quip to be a hardbound truth.
Economics has always been a concept that liberals cannot understand. Deep-blue California’s recent passing of Assembly Bill 1228, forcing certain — but not all — fast-food restaurants to wildly raise their minimum wage by up to $4 an hour all at once, is having the unintended consequence of costing people their jobs, not enriching their lives.
As CNBC noted, the state has more than 500,000 fast-food workers, but now many of them are under threat of losing their jobs.
This month, the left coast state’s new $20-per-hour minimum wage took effect on the fast-food industry. Business owners have responded by putting in more electronic ordering devices and firing costly human employees.
The new wage hike comes on the tail of the disastrous COVID shutdowns that devastated the restaurant industry, causing profit margins to plummet. Just as restaurants in California were starting to regain their footing, the left-wing legislature weighed them down with this new wage law.
The warning by Burger King franchise owner Harsh Ghai is on target: Ghai said that the costly new wage law has forced him to put in place a plan to add electronic ordering kiosks at his 140 locations within two months, Business Insider reported.
Ghai even pointed out that prices for customers at fast-food places have gone up between eight and 10 percent in the past year, when prices usually only go up by about three percent a year. And this new wage law will make that problem worse.
“The majority of that is going to get absorbed in the inflation of our food costs,” he said of the higher costs the state is imposing on restaurants. “So we’re not even compensating for most of the labor costs that we’re going to be experiencing with this legislation.”
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Ghai added that the higher prices — already in effect before the higher staffing costs began hitting business owners — are driving customers away. So, instead of raising prices further, the easiest way is to cut the number of employees.
The businessman added that he has revisited plans to roll out electronic, self-ordering kiosks over a 10-year period across his 140 locations and will now add them in a matter of months.
“[W]e are just going ahead and installing the kiosks in every single restaurant in response to the legislation to be able to balance some of these labor costs that are hitting us,” he said.
“We can’t move fast enough on this,” Ghai told Business Insider.
“We’ve done the financial analysis and it makes more sense for us to spend the capital expenditure on the technology, and obviously when you’re buying large amounts of the hardware, you obviously get it for a cheaper price as well,” he added.
“So it’s making more sense for us to just roll that across the business in its entirety,” he said.
Other restaurant chains have responded by firing hundreds of employees. A large number of pizza chains in California immediately fired their delivery drivers earlier this year after the law passed, including Pizza Hut and Southern California Pizza Co. stores in the state.
Many restaurants have even simply closed down rather than face barely scraping, by thanks to the higher costs imposed on them.
Still other restaurants are looking at plans to try locations that have no dining area and no cashiers at all. Chick-fil-A, for instance, is testing its “grab and go” locations where customers order exclusively online or via an app and pick up their order at a drive-through at a location with no cashiers and no eat-in area.
California’s left-wing legislature is causing every fast-food customer to dish out more for their food. But it is also costing tens of thousands of people their jobs. The legislature’s actions are having the exact opposite effect of what they intended.
