Californian fast-food restaurants have had to slash some 10,000 jobs in recent months due to the state’s new minimum wage hike, according to a recent report by the California Business and Industrial Alliance (CABIA) trade group.
The report comes after California’s Democratic Governor Gavin Newsom signed a bill dubbed AB 1228 in September of last year, raising the state’s minimum wage from $16 to $20 an hour. The law came into effect in April and many companies have since been forced to close down, raise prices, or lay off employees.
CABIA president Tom Manzo has told Fox News that Californian businesses had already been “under total attack and total assault for years,” and claimed that the state’s lawmakers were living in a “fantasy land” if they thought that drastically raising wages would help workers and businesses.
“You can only raise prices so much,” Manzo said, insisting that “people are not going to pay $20 for a Big Mac. It’s not going to happen.”
He also stated that jobs in the fast-food industry were never meant to be long-term or high-paying, calling it a “starter industry” in which people start out working as kids to gain a good work ethic for the rest of their careers.
Last week, CABIA ran a full-page ad in the California edition of USA Today, featuring mock “obituaries” of restaurants that have been harmed by the new minimum wage law. These include popular chains such as Pizza Hut, Subway, Burger King, McDonald’s and Cinnabon.
According to the trade group, one taco chain, Rubio’s, has had to close as many as 48 outlets in the state due to the “rising cost of doing business,” including 24 stores in the Los Angeles area, 13 in San Diego, and 11 in Northern California.
Meanwhile, the owner of 140 Burger King franchises in the state has announced he will slash workers’ hours and expedite the rollout of self-service kiosks to offset the impact of the new minimum wage law. Similar measures will be taken by a McDonald’s franchisee, who said he will hike menu prices and delay renovations at his 18 restaurants.
As restaurants across the US have also been forced to gradually raise their prices due to rampant inflation, a survey conducted by LendingTree last month has also found that nearly 80% of consumers now consider fast food to be a “luxury” purchase due to how expensive it has become.