While in college I sat on the university’s committee for on-campus student employees. The question on the table was whether to increase student wages at places like the bookstore, food service, and teacher assistants. Since I represented the students, naturally I advocated for higher wages. The left-leaning administrators and professors on the committee pushed back, arguing that higher wages would mean fewer hours and jobs for students.
Of course, their argument made sense. Even university leftists understand basic economic principles. I did not know how to respond. As I recall, the best I could muster was, “So be it.”
It is about to get much worse. On April 1, that minimum wage went to $20 per hour for workers at fast food restaurant chains with more than 60 locations nationwide. This means that, overnight, franchise owners, who most often only own a few stores, increased the pay of their workers by 25 percent. It does not matter how many restaurants the franchisee owns. It also does not matter if the franchise is located in Beverly Hills or Modesto. The move will impact wages far beyond these restaurants, hitting virtually all businesses in the state.
Why is the state targeting fast food restaurants of all possible employers? Historically in America, fast food restaurants provided the first jobs for young Americans. Flipping burgers was for high school kids. It was there you learned responsibility, the value of hard work, the pride of earning your own paycheck and managing your own money, the tools to apply in future jobs, and began to build your resume. But expecting that of today’s youth is apparently a bridge too far. Instead, they are supposed to focus exclusively on getting into college, where they will be indoctrinated into leftists principles and, rather than learning financial responsibility, will have their debt forgiven. And per the left’s healthcare system, remain on their parent’s health insurance through age 25.
The left does not view these jobs as stepping stones, but rather as careers for adults, and thus insists that they pay a “living wage.” It is yet another example of the left lowering the standards for America. It has so little faith in individuals that it wants Americans to aspire to be fast food workers.
The left also knows that by targeting this industry, it will effectively increase the minimum wage everywhere in California. California had already raised its minimum wage to almost the highest in the country on Jan. 1 at $16 an hour. It couldn’t then raise it another 25 percent months later. So, instead it simply targeted a small segment of the economy, fast food restaurant chains, well aware that all restaurants will have to move to $20 per hour to compete with the targeted restaurants. In turn, most retail stores will have to do the same, as will then most industries.
The state has also created a new nine-member “Fast Food Council” to manage the industry. The Council is comprised of representatives of the restaurant owners, the employees, and the government. Jointly, they will oversee the state’s restaurants to assure working conditions are satisfactory. The Soviet Union ran business in a similar fashion.
The response of the restaurant owners is predictable. Besides reducing worker hours and positions, they will invest less in store upkeep and more in self-service terminals, which eliminate the need for employees. To the extent they can, they will raise prices. And they will be far more likely to open their next location in any state other than California.
This anti-business policy is the latest in a long list that are driving businesses, and people, out of California. In the last decade, for the first time, more people moved from California to other states than to California, resulting in a net loss of about one million people. Considering pretty much everyone agrees California is the country’s most beautiful state, with the most idyllic weather, and with abundant natural resources, there can only be one explanation for this: Horrendous policies resulting from one-party, super majority rule.
To share one story of such a business, my friend dared to open new and renovated bars in downtown Los Angeles 20 years ago when the area was just starting to be revitalized from a place where no one wanted to live into a somewhat livable urban community. He opened ten of them, playing a significant role in making downtown livable. Big investors followed, building new condos, apartments, and office towers. But when the pandemic hit, California shut down his bars for over 15 months, longer than any other state. They lost millions.
They managed to reopen but were subsequently hit with minimum wage increases and other costly new wage and hour rules. Also, since COVID, downtown has gone in the opposite direction, with homelessness and crime now rampant again due to soft-on-crime polices and a hands-off approach to homeless encampments. It’s becoming a ghost town. Buildings now sit empty, or half built. My friend’s company decided last year it would no longer open new L.A. locations. They are now opening them in Texas. Eight have opened thus far, with another four in the works.
To cite another example, Los Angeles implemented a new tax on real estate sales last year. If you sell any property over $5 million dollars, residential or commercial, you must pay a 4 to 5.5 percent tax on the gross proceeds, regardless of whether you made a profit or not. As described by CBRE President Lew Horne, the effect as been to effectively redline L.A. for new development.
Why develop in Los Angeles where you have to give up as much as half of your profit in taxes when most other places have no such tax? Numerous California cities have followed suit.
California politicians seemingly learn no lessons from their business-killing policies. Rather, they blindly forge ahead into the socialist abyss. Their response appears to be: So be it. The only silver lining is that the rest of America gets to watch and learn, and benefit.
