Just months after getting a raise to $20 per hour, unions want a $0.70 raise. I wrote about this here and here and here. KTLA in Los Angeles has the story.
Four months after California boosted the minimum wage for fast food workers from $16 to $20 an hour, the union representing hundreds of thousands of employees is asking for another raise.
Members of the California Fast Food Workers Union, a branch of the Service Employees International Union (SEIU), presented their “demands” at Wednesday’s first-ever meeting of the state’s Fast Food Council.
The panel is comprised of government appointees, industry representatives, and worker representatives. It is tasked with developing standards for California’s fast food industry, including pay.
In a memo sent to KTLA 5 News, the SEIU is asking that the minimum wage be increased to $20.70 per hour by January 1, 2025, “to keep up with the rising cost of living.”
KTLA survey results (July 12, 2024, 3:30 left coast time). Click for larger image.
Ah, yes, our old pals at the SEIU. The $20 minimum wage has barely begun to bite franchisees. More from KTLA:
Most, if not all, major chains have hiked menu prices by single digits or low double digits. Franchisees also acknowledge cutting back on employee hours or scheduling fewer shifts.
“I have been forced to raise prices,” an Arby franchisee told the council. “I try to do the best I can. I have taken money out of my own savings to make things work this last quarter. But I don’t know how long I’ll be able to sustain something like that moving forward.”
Jot Condie, president and CEO of the California Restaurant Association, which opposed AB 1228, said businesses are simultaneously feeling the squeeze from rising rents and food costs.
“When labor costs jump more than 25% overnight, any restaurant business with already-thin margins will be forced to reduce expenses elsewhere,” Condie said. “They don’t have a lot of options beyond increasing prices, reducing hours of operation, or scaling back the size of their workforce.”
KTLA also reports on a survey done by the Employment Policy Institute.
A survey conducted by the Employment Policies Institute in June and July examined how raising the minimum wage has impacted 182 restaurant operators in the Golden State. It was conducted online and included limited-service restaurant operators and partner associations.
…
The survey found 67% of restaurant operators said the wage increase would cost their business at least $100,000 per location. About one in four said it would cost more than $200,000.The vast majority of restaurant owners, 98%, said they had already raised menu prices. About 89% said they had reduced work hours for employees, 73% said they had limited overtime or pick-up opportunities and 70% had reduced staff or consolidated positions.
Finally, from one of my previous articles:
Los Angeles TV station KTLA recently ran a story describing yet another factor that contributes to slow adjustments in the labor market. This is unpaid labor by firm owners. “California fast food franchisees are responding to $20 minimum wage by cutting hours” is the headline. The story describes the plights of several workers who have seen their hours reduced. In many cases, the reduction has been to under 30 hours per week. This, of course, gets around the ACA requirement that full-time employees must be provided health insurance.
When there are fewer hours worked, sales should decrease. One reason is that fewer hours can lead to shorter business hours. But the owners of these restaurants don’t like that solution. So they are working shifts themselves. Although the article doesn’t say this, my guess is that they’re not paying themselves $20 per hour. In fact, I’ll go further and speculate that the wage these folks are earning is $0. Talk about a cost-cutting solution.
I can’t repeat this often enough. Demand curves slope downward. When production costs increase across and entire industry, the supply curve shifts inward. This raises price and lowers output. Honestly, I sometimes wonder about the IQs of our elected officials.
