The California Business & Industrial Alliance (CBIA) recently had a full-page ad in the statewide edition of USA Today showcasing the negative impacts of California Assembly Bill 1228, which Governor Gavin Newsom (D) signed into law last September, requiring some fast-food restaurants to pay employees at least $20/hour.
Soon after CBIA reported that fast-food restaurants have cut nearly 10,000 jobs because of the new wage, founder Tom Manzo says people from places as high as Governor Gavin Newsom's (D) office called to argue the numbers were not accurate.
"The Hoover Institution at Stanford … did the study; we cited their study," Manzo explains. "This is their work. I'm just really, really surprised that the governor's office is making a full-court press on this."
Even the Los Angeles Times reached out to CABIA about what Manzo calls the full-page "mock obituary" featuring comments from employees of restaurants – some national, others regional statewide chains – talking about how this $20 an hour wage would hurt the business.
Supporters of higher minimum wages, particularly in the fast-food sector, have long claimed that wealthy corporations like McDonald's could afford to pay their employees more money. But as Manzo points out, the corporations are not the ones paying the workers; the owners of the franchise locations are.
"Franchises are not multi-billion-dollar corporations," he asserts. "These are family-owned businesses that might own 10 stores or 15 stores. They're not as profitable as people would think, and they're only going to raise prices so much. If they raise them too high, people are going to stop going there."
Noting that few would pay $20 for a Big Mac, because "fast-food is not supposed to be a luxury item," Manzo says business owners looking to expand in California are going to turn to self-service kiosks and cutting employees' hours in order to keep their restaurants afloat.
According to the State of California, the $20 an hour minimum wage is required for restaurants that are part of a chain of at least 60 establishments nationwide.
