Due to an odd medical ailment a few years ago, I developed a craving for iron-rich cheeseburgers and ate them constantly. I've long been cured, but in the process became something of a connoisseur of the offerings at virtually every fast-food joint. I've also watched prices for such fare soar to eye-popping levels.
Recently, my wife and I stopped for a couple of ordinary burger/fry/drink meals at a national fast-food chain and were set back nearly $30, which is a third more than I recall paying before. I don't blame the owners given rising wages, new labor laws, and food-price inflation, but as a consumer I'll be cooking my own burgers from now on.
Government policies drive up the costs of things and those rising costs put a damper on business, which is obvious to everyone who is not a member of the legislature. The state already has hammered full-service restaurants. During a recent visit to Sacramento, I noticed most of my favorite spots were shuttered—the result of COVID shutdowns, downtown riots, and whatnot.
Now the state and feds are going after the fast-food industry—and it couldn't come at a worse time. "Fast food franchisees are facing post-COVID headwinds that could spur more of them to file bankruptcy in the coming months," reported Bloomberg Law. The article pointed to the usual struggles—plus rising interest rates and tightening lending standards.
Last year, the Legislature passed—and Gov. Gavin Newsom signed—something known as the FAST (Fast Food Accountability and Standards) Recovery Act or Assembly Bill 257, which creates a new state council. Government will dictate "sector-wide minimum standards on wages, working hours, and other working conditions related to the health, safety, and welfare of, and supplying the necessary cost of proper living" for fast-food workers.
This is radical stuff, essentially a union-demanded end-run around the organizing process. Following a European model, unions used their political power to create a state agency that—given the political makeup of the lawmakers who have created it—those same unions will dominate. They'll have the power to raise the minimum wage to $22 an hour and impose every manner of costly workplace standard regardless of what the business owners think.
The law is a direct attack on the franchise restaurant model, by which small businesses own a restaurant with national branding. "While California already has some of the most robust labor laws on the books, advocates say those rules are often flouted in part because franchisees have little legal authority to make changes to their businesses aside from cutting corners on worker pay," according to an article last year in left-leaning Vox.
Here we go again, as the Legislature tries to "help" lower-wage workers by destroying their jobs—or at least eroding the profitability of the companies that hire them. We all remember Assembly Bill 5, which promised to provide California's independent contractors with a raft of new benefits and protect them from "wage theft" and other such nonsense. It was a labor priority bill promoted by many of the same interests that championed AB 257.
As a refresher, AB 5 didn't work out as predicted. Instead of hiring their freelancers and permanent employees, companies (including Vox media, which ran an article touting the "landmark" worker law) slashed independent-contracting jobs. Most freelancers themselves were furious, as the new "protection" law tried to push them into a 9-5 factory-floor/cubicle model they were trying to avoid.
Under pressure, the Legislature ultimately exempted more than 100 industries from its provisions and voters exempted ride-share drivers (Uber, Lyft, DoorDash). Yet labor and its legislative errand people rarely learn the requisite lessons. Now AB 257 is on hold after the restaurant industry qualified a referendum for the 2024 ballot.
Instead of seeing the parallels to AB 5, lawmakers are doubling down on this anti-franchise approach. This year, they're advancing the Fast Food Franchisor Responsibility Act (Assembly Bill 1228), which seems like a retributive measure against the restaurant industry for qualifying the measure. To get the sectoral-bargaining bill through, its supporters stripped out language that would have held national franchisors liable for any labor violations by franchisees. AB 1228 reintroduces this as a stand-alone bill.
Just as the Biden administration is trying to impose AB 5-style laws via regulatory fiat, it also is trying to impose a regulation similar to AB 1228 via the National Labor Relations Board. As The Wall Street Journal opined, "The rule would strengthen the hand of Big Labor. Reclassifying contractors as franchise employees could force many parent companies to negotiate with unions, rather than requiring unions to negotiate with local owners."
The president and California lawmakers are so intent on doing union bidding that they refuse to recognize these efforts destroy businesses, eliminate jobs and drive up the cost of eating out. They keep passing laws that "help" workers by eliminating their jobs. How absurd is that?
This column was first published in The Orange County Register.