It doesn’t happen often, but about a week ago there was a tweet that made my day. Jeff Bezos, one of the richest men in the world, posted a picture of himself finishing a Big Mac and fries with the caption "My first job. And still the same great burger. Happy Sunday!"
That’s right – the man who founded Amazon and created the most incredible distribution system in human history, got his start with a minimum wage job at McDonald’s. Just as impressive, despite the fact that his tremendous wealth means he can have any meal he desires, he sometimes still prefers a classic American burger and fries that virtually any American can afford.
In three short sentences, it was a tweet about so many things that make American exceptional. It was about opportunity and a path from the working class to, well, anywhere your ambition may take you. It was about a dream – the American Dream – that actually can come true.
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Of course, the usual suspects on the Left attacked Mr. Bezos for the tweet. But their attacks can’t change the facts. A minimum wage McDonald’s job is where he started – and Amazon is where he ended up. Any sane person would respect that.
Just as impressively, it said something very positive about American business. McDonald’s, a small restaurant started by two brothers in Riverside, California, became a worldwide icon because it has products people want – regardless of their wealth – at a price virtually anyone can afford – regardless of their income. What a concept!
The success of that venture created opportunity for millions of individuals who got their start at a quick service restaurant, Mr. Bezos being but one shining example. Personally, while not nearly as successful as Mr. Bezos, I got my minimum wage start at a Baskin & Robbins in Chagrin Falls, Ohio – and went on to live the American Dream. Perhaps that’s why I found the Bezos tweet so uplifting.
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Unfortunately, it took the progressive geniuses running the state of California literally a day to bring that optimism crashing down. Literally on the following day, California lawmakers passed legislation titled the Fast Food Accountability and Standards Recovery Act ("FAST") raising the state’s minimum wage from an already generous $15 and hour to $22 for quick service restaurant employees. Adding to California’s growing image as a dystopian state, the legislation would also create a new state commission with authority to determine not only those workers’ wages but also their hours and working conditions.
The irony is that this legislation would hurt the very people it is being sold as protecting.
Most workers make more than their state’s minimum wage and those who do earn it are likely to be low skilled/entry level teenagers or young adults working part-time. Nationally, restaurant workers' hourly wages average about $18.50 an hour, likely higher in California with its minimum wage already at $15. So, what are the risks of further increasing it?
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Restaurants are already battling to recover from California’s severe pandemic lockdowns while keeping prices down in the face of inflation that is simultaneously driving labor and commodity costs to unprecedented highs – and at rates not seen in 40 years. If you add additional labor costs on top of these already crippling cost increases, few new restaurants are likely to open, and many are likely to close, as leases expire, or entrepreneurs simply give up and move to Texas, Florida, or Tennessee?
Restaurants that do stay open will need to find ways to cut labor with automation being a key component, including ordering kiosks and machines that actually make burgers without the human touch. With fewer restaurants opening, many closing and those that stay open struggling to cut labor, those opportunity creating jobs that millions of individuals, including Mr. Bezos and I, relied on to get our starts will vanish like electricity and water in a California summer.
Sadly, for young Californians, that’s opportunity lost and never to be recovered.
How about those delicious and affordable burgers and fries? They, too, will be a thing of the past as the few surviving restaurants will dramatically increase prices to offset ever increasing labor costs. Mr. Bezos will still be able to afford his Big Mac (and me my Carl’s Jr. Western Bacon Cheeseburger). But for many Californians, those items will no longer be affordable.
These results are far from difficult to predict. In a recent survey of economists by the Employment Policy Institute, a strong majority (83%) opposed adopting this law; 93% believed the cost of operating a franchise would increase; 84% believed fewer restaurant chains would be willing to operate in California; 84% believed consumers prices would increase as business owners pass on higher costs; and 73% believed franchisees would close restaurants.
It’s really not rocket science.
Let’s hope California Gov. Gavin Newsom, who once owned a restaurant or two, will see the dangers of this FAST legislation, and decline to sign it. The deadline is September 30th. But the unions and other progressive groups supporting this government overreach supported Newsom in his recent recall fight.
Failing to support their efforts would take a level of political courage rarely seen in the formerly Golden State. Which helps explains why California is the Golden State no more.
