Gavin Newsom's $20 min wage laws lead to mass layoffs in California: report

Nearly 10,000 people have lost their jobs since the law took effect on April 1.

Katie Daviscourt Seattle WA
Since California Gov. Gavin Newsom's $20 minimum wage law took effect in April, nearly 10,000 jobs have been slashed from the state's restaurant industry. Struggling franchises have been forced to cut labor and spike prices to survive the costly wage increase, resulting in mass layoffs and a decrease in consumerism.

Tom Manzo, president and founder of the California Business and Industrial Alliance, told Fox News that state lawmakers were living in a "fantasy land" when they thought minimum wage increases would help workers and businesses. He revealed that since Governor Newsom signed AB 1287 into law, which took effect April 1, nearly 10,000 people in the restaurant industry have lost their jobs.

"California businesses have been under total attack and total assault for years," said Manzo. "It's just another law that puts businesses in further jeopardy."

A number of well-known restaurants, such as McDonald's, Burger King, and even the Golden State's famous burger chain In-N-Out Burger, had to raise prices to make up for the increased pay. Many were forced to reduce employee hours, and some transitioned to automation, per the New York Post.

"You can only raise prices so much," said Manzo. "And you're seeing it. People are not going to pay $20 for a Big Mac. It's not going to happen."

Manzo also called fast food "a starter industry" and explained that it was never meant to be a long-term, high-paying job.

"You get a job as a kid working in a fast food restaurant and you learn some good work ethic and that takes you into life," he said.

The first big chain to be affected by the new regulation was Rubio's California Grill, which is well-known for its fish tacos. At the end of May, just one month after the law took effect, 48 of its approximately 134 sites were closed. The closures were attributed to the state's "increasing cost of doing business." On Wednesday, the chain filed for bankruptcy.

Fosters Freeze, another fast food chain, closed its Fresno location, citing financial difficulties in having to pay employees higher wages.

According to a recent report from Kalinowski Equity Research, Taco Bell raised menu prices by 3 percent and Starbucks added 50 cents to every menu item since the law took effect. 78 percent of consumers now view fast food as "luxury" purchases because of how pricey the meals have gotten, per a recent Lending Tree survey.
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