Hiltzik: How the fast-food industry uses deceptive employment numbers
How did the California Business and Industrial Alliance claim the new minimum wage law affected employment within the state's fast-food industry?
The California Business and Industrial Alliance (CABIA) claimed that the new minimum wage law in California had a negative impact on employment within the state's fast-food industry. They stated that nearly 10,000 fast-food jobs were lost due to the increase in the minimum wage from $16 to $20 per hour. This claim was based on a decrease in employment figures from September 2023 to January 2024, a period that saw the signing of the new minimum wage bill1. CABIA attributed these job losses to the higher labor costs that employers would need to pay as a result of the new law. However, it is important to note that this claim has been criticized for using non-seasonally adjusted employment figures, which do not account for the typical seasonal fluctuations in the fast-food industry.
What misleading statistics were cited by business lobbyist Tom Manzo regarding the impact of the minimum wage law on fast-food employment?
Business lobbyist Tom Manzo, citing an article by UCLA economics professor Lee E. Ohanian, claimed that "nearly 10,000" fast-food jobs were lost due to the minimum wage law in California. This claim was based on a government statistic that was not seasonally adjusted, which is crucial when tracking jobs in seasonal industries like restaurants. When using seasonally adjusted figures, employment in the fast-food sector actually rose during the period in question. The misleading statistics were used to argue against the new minimum wage law, which raised the minimum wage for fast-food workers to $20 per hour.
What specific changes did the new minimum wage law introduce for fast-food workers in California?
The new minimum wage law in California, known as AB 1228, introduced a significant increase in the minimum wage for fast-food workers4. As of April 1, 2024, the minimum wage for fast-food workers rose to $20 per hour, up from the previous statewide minimum wage of $16 an hour. This wage increase applies to workers at fast-food establishments that are part of a chain with at least 60 locations nationwide and primarily sell food and beverages for immediate consumption.
In addition to the wage increase, the law also established a Fast Food Council, which is composed of appointed representatives from the fast-food restaurant industry, fast-food restaurant franchisees or restaurant owners, fast-food restaurant employees, advocates for fast-food restaurant employees, and one unaffiliated member of the public4. The Council also has two non-voting members, one from the Department of Industrial Relations and one from the Governor's Office of Business and Economic Development. The Council is responsible for developing new minimum employment standards specific to the fast-food industry, which could include future minimum wage increases (although these could not occur prior to January 1, 2025) as well as working conditions, health and safety standards, and training5.
It is important to note that the law has faced some controversy and has undergone changes since its initial passage. For example, there was a bakery exemption included in the law, which provided an exemption from the $20 wage for fast-food restaurants that bake their own bread and sell it as a stand-alone item. This exemption was allegedly included to satisfy Governor Newsom due to his relationship with Greg Flynn, a billionaire who owns several Panera Bread franchises in California. However, after facing criticism, the exemption was removed from the law.
Overall, the new minimum wage law in California aims to offer increased protections for workers in the fast-food industry by raising the minimum wage and establishing a council to regulate wages and working conditions15.