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California passes new law establishing fast-food minimum wage of $20/hour, McDonald’s to spend $250,000 more per restaurant per year
By Ethan Huff // Sep 19, 2023

The California legislature just passed a new bill to require all major fast-food chains throughout the state to pay their employees at least $20 per hour – and McDonald's, the world's largest fast-food chain with 40,100 stores worldwide, is really angry about it.

The passage of Assembly Bill 1228, which is now on its way to Gov. Gavin Newsom's desk, "will result in a devastating financial blow to California McDonald's franchises at a projected annual cost of $250,000 per McDonald's restaurant," responded the National Owners Association to the bill's passage.

According to the legislators behind AB 1228, the bill only affects the "rich" fast-food places that have more than 60 locations nationwide. This is technically true, though it will likely inadvertently affect small fast-food chains or individual family-owned restaurants because employees will choose to apply and work at McDonald's for $20 an hour versus making far less at theirs.

"Small restaurants will be forced to raise their wages, too, just to get workers," is how one report put it.

(Related: The more minimum wage increases, the more businesses will try to replace them with artificial intelligence [AI] robots.)

California really wants fast-food chains to pay their employees higher wages

Another thing AB 1228 does is create an entirely new government office comprised of a 10-member council that will govern the implementation and enforcement of its provisions.

In its first draft, AB 1228 would have allowed the California government to fine major corporations in the event that franchise operators in the state skirt or ignore the law. That provision was removed, but head corporations like McDonald's are still upset.

The new $20 minimum wage requirement is set to go into effect immediately, followed by even more increases to occur from 2025 through 2029.

Contention over the new legislation reached a fever pitch after the California legislature pushed through the FAST Act earlier this year, which is even worse for the state's restaurant industry.

"The bill was so egregious that the industry banded together and demanded changes as well as representation in the negotiations, instead of it being left to the rapacious unions and the left-wing legislature to craft the thing unbidden," one report explains.

The aim of the FAST Act is to increase California's minimum wage to $25 per hour, and there was a lot of fury after it was revealed that the campaign to pass it was, ironically, only paying canvassers $15 per hour.

After the FAST Act was passed, McDonald's U.S. President Joe Erlinger wrote a public letter calling it "lopsided" and "ill-considered." Erlinger further blasted California lawmakers for not treating all restaurants equally and instead only targeting national chains like McDonald's.

It turns out that the FAST Act is now on the chopping block with the strong possibility that it will be repealed and replaced, and waiting in the wings was AB 1228 to take its place.

The new AB 1228 requires that four members of the 10-member committee be representatives from the fast-food industry, as well as four union members. Previously, there were no such requirements that the fast-food industry be represented on the committee.

"I certainly wouldn't say it's catastrophic, and certainly not as bad as it could have played out over the next year or two," commented Mark Kalinowski, CEO of Kalinowski Equity Research.

At a time when the U.S. economy is already teetering on the edge, the passage of AB 1228, which is likely to be signed into law by Newsom, will only further accelerate the collapse of the system as we currently know it.

The latest news about the escalating economic crisis and what comes next as the fallout from it can be found at Collapse.news.

Sources for this article include:



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