Once again, Gavin Newsom has a disaster of epic proportions on his hands. This time it’s California’s fast-food minimum wage law, which went into effect on April 1. The union-backed law mandates a shocking $20-an-hour minimum wage, the equivalent of a $41,600-a-year salary.
In the months since its implementation, it has become increasingly clear that the law is having the exact opposite of its intended effect. Fast-food workers, who were told that they would benefit from the legislation, are facing layoffs, reduced hours, and business closures. (READ MORE: Gavin Newsom Is on Top of the World)
The number of harmed workers is quickly adding up. The owner of a franchise of pizza parlors, Round Table Pizza, announced the elimination of 73 driver positions as a result of the law. Two Pizza Hut franchisees also laid off 1,200 delivery workers because of their inability to employ those workers at the increased minimum wage. Rubio’s Coastal Grill — known for serving a California specialty: fish tacos — shuttered 48 California restaurants due to the “rising cost of doing business in the state.” Other companies have slowed hiring, decreased worker benefits, accelerated the use of automation and AI, and stalled expansion plans. The California Business and Industrial Alliance, a business advocacy organization, said in June that 10,000 fast-food jobs have been lost as a result of the law.
This week, a new survey found that 90 percent of California fast-food restaurants have decreased employee hours following the law’s implementation. The survey, which was conducted in June and July by the Employment Policies Institute, surveyed 182 fast-food restaurants. In addition, 73 percent of fast-food locations said they have reduced overtime opportunities or employee shift pickups.
Another sure sign of the law’s disastrous impact is the fact that the state government has exempted itself from having to follow it. This spring, Newsom signed a law to spare fast-food restaurants on state property that have government concession agreements from the $20-an-hour requirement.
The fast-food minimum wage law echoes the debacle that was Assembly Bill 5, Newsom’s 2019 law that essentially outlawed contract work, barring many exceptions. Assembly Bill 5 — much like the fast-food minimum wage law — was a heavy-handed attempt to dictate how businesses compensate workers. Both initiatives were driven by powerful union activists in California. And both failed spectacularly in their missions. (READ MORE: Will California Voters Finally Rebuke Newsom?)
After the passage of Assembly Bill 5, it immediately became obvious that forbidding contract work severely harmed the workers who chose this type of employment — often because this type of arrangement is best suited to their personal situation or skills. Those who were most acutely harmed included musicians, translators, independent truck drivers, artists, personal trainers, consultants, and freelance writers.
The public took special notice of the plight of freelance writers, perhaps because these workers were able to vocally register their discontent. Under Assembly Bill 5, freelance writers were arbitrarily limited to writing 35 articles per publication per year. The harsh reality Assembly Bill 5 presented to these workers was well-illustrated by the irony of Vox Media’s decision to fire 200 California freelance sports writers as a result of the law even though Vox, one of its publications, had called the law “a victory for workers everywhere.”
Assembly Bill 5 caused so much consternation for California workers that, when the California Legislature reconvened after the law’s implementation, it immediately set upon fixing the law — by undoing much of it. No fewer than 34 bills were proposed in the new session to address the damage caused by Assembly Bill 5. The whole situation was a total embarrassment for Newsom. He had rolled out a transformative law but all he had succeeded in doing was harming California workers, particularly those with low incomes. Even his own former deputy chief of staff, Yassar Ali, labeled Assembly Bill 5 “one of the most destructive pieces of legislation in the last 20 years.”
Newsom’s signature on the bill to undo much of Assembly Bill 5 illustrates the insider influence that characterizes his governance. Newsom signed the bill only after Willie Brown, the former speaker of the California Assembly and mayor of San Francisco, complained to the governor that Assembly Bill 5 was preventing him from submitting a 36th column that year to the San Francisco Chronicle. Brown is Newsom’s political godfather: After San Francisco’s 2003 mayoral election, the Associated Press referred to Newsom as “Mayor Willie Brown’s hand-picked successor.” According to Politico, after Newsom signed the bill, he texted Brown, “I signed the bill, write the damn column!” (READ MORE: Gavin Newsom Wants to Be an Emperor)
Such insider influence may likewise be necessary to repeal California’s fast-food minimum wage law. In fact, there is evidence indicating that Newsom worked to advance the interests of his political allies through the drafting of this legislation. Earlier this year, Bloomberg reported that Newsom had pushed for an exemption in the law for businesses that bake bread and sell it as a standalone item. The exemption, Bloomberg said, would benefit billionaire and longtime Newsom donor Greg Flynn, who owns dozens of Panera restaurants in California. Newsom’s staff, however, denied that Panera had been purposefully exempted and said that the bakery restaurant was not exempt from the law. Flynn said in a statement that he had suggested that bakeries and bagel shops should not be included under the law, but that he had not asked for “special considerations.”
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Newsom’s attempts to micromanage businesses have resulted in catastrophe for California workers. Despite a national trend toward higher average earnings, workers in California have witnessed a decline in their earnings. In May, leisure and hospitality workers in California faced a 2.6 percent decrease in average weekly earnings compared to the previous year, contrasting with the 3 percent increase seen nationally. Several red states boasted even higher rates of growth than the national average, with Texas achieving a 5.2 percent year-over-year increase in real wages.
And, according to a new survey by the Employment Policies Institute, 73 percent of fast-food restaurants surveyed said that the minimum wage law would make them “significantly less likely” to grow in California, while 74 percent said there is a “greater likelihood” that they would shut their restaurants down.
Newsom’s attempt to create a progressive utopia serves only to promote his own image as a liberal trailblazer. Just like with Assembly Bill 5, California workers are pleading for Gavin Newsom to just leave them alone and to let the free market set their salary.
Ellie Gardey Holmes is the author of Newsom Unleashed: The Progressive Lust for Unbridled Power.