(TheRedAlertNews.com) – A new Democrat policy measure in California is doing more harm than good as restaurants are reportedly forced to lay off workers because of an upcoming minimum wage hike.
In California, restaurant owners are facing the tough decision of reducing their workforce as a preemptive measure against an upcoming rise in the minimum wage for fast food employees, as reported by The Wall Street Journal, cited by The Daily Caller.
The state’s Democrat Governor, Gavin Newsom, ratified legislation in 2022 granting a state-designated board the authority to determine wages, operational conditions, and training benchmarks for fast food establishments.
This legislative move is particularly impacting businesses like pizza outlets that rely on delivery personnel, who could be substituted with third-party services.
These businesses are trimming their workforce in anticipation of the state’s initiative to elevate the minimum hourly wage for fast food laborers from $16 to $20 starting from April 1.
Franchise holders of Pizza Hut and Round Table Pizza have disclosed to the state their plans to dismiss approximately 1,280 delivery drivers this year in anticipation of the impending wage increment.
“This is the reality of today’s restaurants. Operators are doing their best to retain staff and keep doors open,” A spokeswoman for Fat Brands, owner of Round Table Pizza locations in California, told the WSJ.
As of January, California was home to 726,000 fast food employees, marking a 1.3% decrease from the previous September, while the overall private sector employment saw a slight decline of 0.2% over the same period.
In light of the labor cost surge, certain California eateries, such as El Pollo Loco, are shifting towards automation for tasks like salsa production, which they have shared with investors.
The wage increase has sparked debate, notably because of a specific exemption within the law that allows restaurant chains that primarily bake and sell bread as a separate menu item, like Panera, to avoid implementing the wage rise.
“It pains me to think about shutting down stores or laying people off. I love California, and I’m very sad about what’s going on,” said Alexander Johnson, owner of ten Auntie Anne’s and Cinnabon outlets in California.
Johnson highlighted that the wage increase would surge his labor expenses by approximately $470,000, prompting him to cut around ten positions.
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