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California business leaders make desperate plea over $20-an-hour minimum wage hikes: 'Fast food should not be a luxury item'
Business leaders in California have slammed the state's decision to hike the minimum wage to $20-an-hour for fast food restaurant employees.
Nearly 10,000 positions across chains from Pizza Hut to Burger King have been cut since the law was signed in September 2023, according to a trade group.
Fast food chains have been hiking their prices and slashing jobs to cut costs to afford the new minimum wage. This week, In-N-Out raised prices - with the Double Double meal now more than $10.
Beloved Mexican chain Rubio's Coastal Grill has filed for bankruptcy and is shutting 48 restaurants in the state becauseof the wage hike.
Desperate business leaders have slammed Governor Gavin Newsom for forcing the law through - and are pleading with him to stop attacking companies.
'Business owners are fed up. Quite frankly, it's having a ripple effect now on everybody,' Tom Manzo, president of California Business and Industrial Alliance (CABIA), told Fox & Friends on Monday.
Business leaders in California including Tom Manzo (pictured) have slammed the state's decision to hike the minimum wage to $20-an-hour for fast food restaurant employees
CABIA put out an advert in the June 6 edition of USA Today with mock 'obituaries' of popular brands to highlight the impact the new law is having on businesses.
'The biggest issue California faces is continued increased cost and a continued anti-business climate,' Manzo said. 'That's why we decided to run this ad in the first place.
'People can't afford fast food when… it should not be a luxury item. Fast food isn't a luxury item.'
The trade group's tongue-in-cheek advert, titled 'In Memoriam: Victims of Newsom's minimum wage', highlighted the issues faced by smaller brands including Rubio's, and fast food giants including Pizza Hut, Burger King , Subway and McDonald's.
It features news clips documenting the changes made by companies in response to the wage increase.
This includes raising prices, letting go of workers to cut labor costs - and in some cases shutting down locations.
One says: 'A McDonald's franchisee who owns 18 outposts in California is considering reducing store hours, hiking menu prices and delaying renovations to offset the impact of the state's $20 hourly minimum wage for fast-food workers.'
Manzo said: 'That's why we continue to advocate because legislators, the governor, they need to wake up. You cannot be this anti-business.'
'We're going to continue to fight. We advocate for small to medium-sized businesses, people that don't have a voice. And… California is a great place to live.
'It's just we need to change the direction. We need to change the direct trajectory, and that's what we're going to do. That's our mission.'
Governor Newsom's office claim 4,500 jobs were added in limited service restaurants since the bill was signed last year.
His office added that there were 6,600 new fast-food jobs in the state between April 2023 and April 1.
Restaurant Business editor-in-chief Jonathan Maze does not believe the minimum wage increase has actually helped workers.
'It's a tough thing to do,' he said. 'You got two issues. You have the fact that it was done almost overnight.
'You have the fact that it was a 25 percent increase in the wage rate. Both of those things, happening simultaneously, is a really hard thing for restaurants' bottom line, and you're seeing the effects of it.'
He said Americans are now eating out less than before due to the increases in prices.
'This has been a challenging environment,' Maze added. 'If you looked at what McDonald's had reported just a couple of weeks ago, their prices are up 40 percent since 2019.
'Everything costs a lot more. Construction costs are up, and that requires companies to increase prices.
'The result of all of this is that fast food has largely lost its reputation as a value player. The result of this is consumers are dining out less often. They're not going to McDonald's or other places as often as they had been.'
Even before the law was made official earlier this year, chains including Pizza Hut and Round Table let go of more than a thousands delivery workers to brace for the financial ramifications of the change.
The law, signed by Newsom in September last year, increases fast-food workers' minimum wages to $20-an-hour at chains with more than 60 locations in the US.
California Governor Gavin Newsom signed the fast-food bill raising the minimum wage payable by certain chains on September 28, 2023
To highlight the impact of the law, a trade group took out a fake ad in Thursday's edition of USA Today with mock 'obituaries' of popular brands
Rubio's Coastal Grill announced it would shut 48 restaurants in the state (Pictured: The grand opening of the third Rubio's location in the Pacific Beach neighborhood of San Diego, California in 1986)
Critics warned that businesses would turn to digital ordering kiosks as a way to cut down on wage costs for staff
That is 25 percent more than the standard minimum wage of $16-an-hour in California, which itself came into effect in January.
On a national level, Congress has not touched the minimum wage in decades - it is still $7.25-an-hour. Instead, so-called 'wage wars' play out on a state level.
When the Democrat governor signed the law in 2023, Newsom said the state was getting 'one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast food workers a stronger voice and seat at the table.'
But Republican critics claimed the wage hike would simply mean workers are replaced with self-checkouts and 'robot cooks.'
Harsh Ghai, a Burger King franchisee with 140 restaurants on the West Coast announced in April how he planned to have digital kiosks installed in all his locations in two months.
Until the wage hike, he planned to roll them out over the next five to ten years.