CA Fast-Food Restaurants Raised Prices Due To Min. Wage Hike

A recent trek to southern California brought not only a trip down memory lane for this writer but also a case of sticker shock. Consider just some of the expenses that busted my food budget: $10.71 for a McDonald’s McMuffin meal; $15.93 for a steak burrito (without sides) at Baja Fresh; and $26.44 for a kebab plate and baklava from a local Middle Eastern chain.

These high prices represent one logical result of California’s disastrous mandate to impose a $20 minimum wage on workers in fast-food restaurants. At a time when Americans across the country continue to suffer the ill effects of “Bidenflation,” Gov. Gavin Newsom, D-French Laundry, has imposed yet another higher cost on residents of, and visitors to, the Golden State.

Employers Cutting Hours — and Workers

It stands to reason that imposing a 25 percent increase on businesses’ labor costs would have undesirable effects. Sure enough, a recent survey of limited-service restaurants undertaken by the Employment Policies Institute demonstrates the damage to California establishments and workers.

Among the businesses surveyed, two-thirds (67 percent) believe the new mandate will cost at least $100,000 per restaurant, with more than one-quarter (26 percent) claiming the law will impose at least $200,000 in costs. Unsurprisingly, just about all of the restaurant owners surveyed (98 percent) said they had raised prices in response. Nearly 9 in 10 (89 percent) said they had reduced employee hours, with large majorities also claiming they would restrict overtime (73 percent) and trim down their staff or merge positions (70 percent).

Owners also responded that the higher minimum wage would “somewhat” (50 percent) or “significantly” (25%) reduce employee counts and “significantly increase” menu prices (73 percent). Furthermore, “Ninety-two percent of owners think that raising menu prices will adversely affect customer foot traffic.” These entrepreneurs also thought the mandate would make them “significantly less likely” to expand in California (73 percent), and more likely to expand outside the state — or shut down altogether.

A recent Associated Press story provided plenty of anecdotes to go with the survey data about the law’s harmful effects:

[Lawrence] Cheng used to have nearly a dozen employees on the afternoon shift at his Fountain Valley [Wendy’s] location in Orange County. Now he only schedules seven for each shift as he scrambles to absorb a dramatic jump in labor costs after a new California law boosted the hourly wage for fast food workers on April 1 from $16 to $20 an hour. “We just kind of cut where we can,” he said. “I schedule one less person and then I come in for that time that I didn’t schedule and I work that hour.”

Cheng said he raised menu prices by roughly 8 percent in January to account for the effects of the impending mandate, yet he still has to cut hours to keep his business afloat. Ditto a Jersey Mike’s franchisee, who raised the price of a turkey sub to $11.15, yet has also cut his employee count from 165 to 145 across his nine stores.

Vacation from Reality

Despite the obvious harms being inflicted on workers and businesses, Democrat elites continue to advertise the minimum wage law as a success. Newsom has attacked The Wall Street Journal’s editorials criticizing the minimum wage mandate, claiming that employment in limited-service restaurants has increased since the mandate took effect in April. But the Journal recently noted that, on a seasonally adjusted basis, employment in affected industries has actually declined, while limited-service restaurant employment in neighboring Nevada has risen.

And the costs of the mandate are easy for Newsom to dismiss. As the Journal pointed out earlier this year, a branch of the wine shop Newsom founded advertised for a vacant busboy position paying $16 hourly — not the $20 required for fast-food workers under the law he signed.

During my SoCal sojourn, I marveled at California’s inherent advantages — gorgeous scenery, beautiful weather, and a can-do spirit that made Silicon Valley the envy of the world. Yet Democrat policies such as the $20 minimum wage, the “net zero” climate obsession ($6 per gallon of gas, anyone?), and unaffordable housing continue to drive residents away in droves. Even as I enjoyed my time at the beach, I couldn’t help but wonder when Newsom and his left-wing Democrat colleagues will end their own vacation — from reality — and finally bring the Golden State back into the economic mainstream. 

Chris Jacobs is founder and CEO of Juniper Research Group, a policy consulting firm based in Washington, and author of the book “The Case Against Single Payer.” He appeared in the 1995 “Jeopardy!” Teen Tournament and is on Twitter: @chrisjacobsHC.