California Governor Gavin Newsom’s $20 minimum wage law, which took effect on April 1, has resulted in the loss of nearly 10,000 jobs in the state’s restaurant industry. Struggling franchises have been forced to cut labor and increase prices to survive the costly wage hike, leading to mass layoffs and a decrease in consumer spending.
Tom Manzo, president and founder of the California Business and Industrial Alliance, criticized state lawmakers for living in a “fantasy land” when they believed that minimum wage increases would benefit workers and businesses. He revealed that since the law took effect, nearly 10,000 people in the restaurant industry have lost their jobs, stating, “California businesses have been under total attack and total assault for years. It’s just another law that puts businesses in further jeopardy.”
Well-known fast food chains, such as McDonald’s, Burger King, and In-N-Out Burger, have had to raise prices to compensate for the increased labor costs. Many were forced to reduce employee hours, and some even transitioned to automation. Manzo pointed out that fast food is meant to be a “starter industry” for young workers to learn good work ethic, not a long-term, high-paying job.
The first major chain to be affected by the new regulation was Rubio’s California Grill, which closed 48 of its approximately 134 locations just one month after the law took effect, citing the state’s “increasing cost of doing business.” On Wednesday, the chain filed for bankruptcy. Fosters Freeze, another fast food chain, also closed its Fresno location due to financial difficulties related to paying employees higher wages.
