California's fast food wage mandate is putting a strain on working-class wallets

Prices are rising again – but for once Joe Biden is not to blame. Unsurprisingly, however, it's another Democrat.

Recent surveys have shown the extent to which restaurant prices in California have skyrocketed since the new minimum wage for chain restaurants took effect in that state. Even though Biden had nothing to do with this latest increase in costs for residents, Gov. Gavin Newsom (D-French Laundry) and Golden State lawmakers helped bring it about.

Rising prices

A study published in the Wall Street Journal provided graphic evidence of how higher wage demands that went into effect on April 1 had increased the price of meals at California restaurants by up to 10 percent in the last two months alone:

The Journal interviewed a Los Angeles resident who said, “His usual $16 meal that he picks up weekly at Chick-fil-A in Hollywood now costs $20.” To most Americans, the idea of ​​$16 for Paying for a fast food meal is already like a robbery, not to mention taking a 25 percent increase. However, as the Journal noted, the state, which already had some of the highest fast food prices in the country, is now facing even more inflationary pain.

Businesses Exempt from the Governor's Office

The minimum wage mandate began to cause pain months before it took effect. As I previously noted in The Federalist, plants began laying off drivers just before Christmas in anticipation of higher labor costs, and companies told customers they had to raise prices to keep up. (You can't say they didn't warn you.)

While the mandate obviously has inflationary effects, it also has distortionary effects. Because it only applies to fast-food restaurants, companies in other industries — even big giants like Amazon — don't have to be required by the government to raise their wages. This makes restaurants more lucrative for workers and less profitable for owners, compared to, say, grocery stores, most of which now sell prepared meals similar to those prepared in fast-food restaurants.

Additionally, as the Journal noted, “California's wage law does not apply to restaurants with fewer than 60 locations nationwide.” While it may sound nice to give the “mom-and-pop operations” a break from the new mandate, the administration has no place in picking winners and losers in this way. More specifically, what do you think are the chances that a growing company with 59 or even 55 locations will continue to expand, exceed the 60 location threshold, and face higher labor costs across all locations in California? Two words: great opportunity.

There is another irony, and perhaps not surprising, that it involves Newsom. As reported in a recent Journal editorial, a branch of Newsom's wine shop, which Newsom founded three decades ago, recently advertised for a waiter – one who would pay $16 an hour, not the hourly rate required under the new law $20. Despite offering a Wagyu burger for $28 and a New York strip steak for $67, this restaurant cannot afford to pay its employees the “living wage” that Newsom says restaurant workers need.

Out-of-touch elites

Newsom told the Journal that he placed his company “into a blind trust following his election as governor in 2018 and does not operate his restaurants on a day-to-day basis.” (Of course he would say that.) But it's another example of politicians not even trying to live by the standards they impose on others. If the fancy French laundry started complaining to Newsom about labor costs, maybe he would actually listen.

It shouldn't cost a family a fortune to afford an inexpensive evening at a local fast food restaurant – one of the few treats some families get to enjoy on a semi-regular basis. But that dream, like so many others, is becoming increasingly out of reach for so many California households, which may explain why so many of them are moving elsewhere.

Anna Harden

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