California Fast Food Fight Club

Commentary

When I came to California in 1987, one of the delightful discoveries was In-N-Out Burger. My new local friends raved about its Double-Double. And they were right. Although now I’m on that low-carb/keto diet, so I go “protein style.” Still fantastic. And with no bun, I can have two!

In-N-Out keeps expanding. The latest is another one in Huntington Beach, with wages starting at $19 an hour. Not bad. For an eight-hour day, that’s $152. Or $760 a week. Or $3,040 a month. Or $36,480 a year. Of course, that’s before all the taxes are taken out. And California is so expensive you need twice that just to get by.

But often such jobs are good for students, a family’s second income, or someone who is just starting out on a career in the fast-food or hospitality industries and will be working his or her way up the food chain (pun intended), moving to management, then to corporate.

I know several executives who started out flipping burgers at McDonald’s years ago, went to Hamburger University in Chicago to learn management, and moved on to corporate jobs in other industries. Not every successful executive went to Harvard Business School.

I bring all this up because the fast-food industry in California is striking back against the absurd law passed last year, Assembly Bill 257, by Assemblyman Chris Holden (D-Pasadena). It set up yet another state bureaucracy, the Fast Food Council at the Department of Industrial Relations, to regulate the industry and impose a $22 per hour minimum wage. That’s well above the new $15.50 minimum that began on Jan. 1 for most state jobs.

More, AB 257 authorizes annual cost-of-living increases. So with inflation continuing at around 7 percent a year, the actual minimum for fast-food jobs could be as high as $25 an hour in 2025. That would come to about $4,000 a month.

According to the California Secretary of State, the fast-food industry just qualified its initiative to repeal AB 257. Under state law, that means the law will be suspended pending voter actions on Nov. 5, 2024. If it’s defeated, then that $25 minimum wage mentioned above would go into effect the next Jan. 1.

Newsom Ambitions

Gov. Gavin Newsom signed AB 257 because, as I wrote in The Epoch Times last September, it advances his position with organized labor, the bill’s big backer, ahead of an expected presidential run. The suspension of the law until at least after the November 2024 election makes it even sweeter. The law’s bad effects won’t hit during a presidential run should President Biden’s difficulties with classified documents end his expected re-election bid, opening the door for Newsom and others.

Newsom’s signing statement for AB 257 last Labor Day sounded like a plank in a presidential campaign platform:

California is committed to ensuring that the men and women who have helped build our world-class economy are able to share in the state’s prosperity. Today’s action gives hardworking fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry. I’m proud to sign this legislation on Labor Day when we pay tribute to the workers who keep our state running as we build a stronger, more inclusive economy for all Californians.

California is doomed to suffer from the presidential ambitions of its politicians. Not said by Newsom was minimum-wage laws—especially one as high as $25 an hour—kill jobs. Employers automate, or just leave the business.

Forbes recently headlined, “Robot Fast Food Cook Costs Less Than Half A Human Worker.” The story:

Nala Robotics has launched a fast food robot that it says can fry chicken wings, French fries, and other foods, season them, and plate them all autonomously. It’s called ‘the Wingman,’ and it’s available to rent for $2,999/month.

“The Wingman is our latest robot to help restaurants and other food providers boost efficiency in the kitchen and scale production, while minimizing the potential for contamination,” Ajay Sunkara, CEO of Nala Robotics, said in a statement.

That $2,999 per month cost is well below the $4,000 I calculated above for a California human worker under AB 257. And the Wingman can work three shifts and takes no holidays nor vacations. So in this state, it’s more like one-fourth the cost.

And this technology only will get better.

Minimum Wage—Maximum Folly

The minimum wage has been debunked so many times. Including by me in the Epoch Times in Dec. 2021, “Why Not a $118 Minimum Wage?” I quoted the great economist Walter Williams on his research that found the minimum wage especially hurts black youngsters and other minority kids just starting out in the work force. He found that first job is crucial for a young person to get experience showing up on time, putting in a good day’s work, and bringing home a paycheck.

It’s only upward from there. But without that first “rung on the latter,” as he put it, the youngster might flounder and not gain success, or go into a bad profession.

Meanwhile, In-N-Out is expanding in other states. This month it announced it will open a new “territory office” in Tennessee, ahead of putting some of its restaurants in that state in 2026, and eventually in surrounding states. According to Eater.com:

It’s a major move for In-N-Out, which has long vowed that it would only expand to states where it could offer the same quality of burgers and fries that it has served in California since 1948. Ensuring that quality involves opening distribution centers and other logistical facilities necessary to support the chain’s operation. When it expanded to Texas in 2011, In-N-Out said that it was only able to do so after building a dedicated facility to produce its beef patties.

My California friends who moved to Tennessee last year are ecstatic at the news. They missed their Double-Doubles. Although not enough to avoid enjoying the Volunteer State’s 0.0 percent state income tax.

By the way, the minimum wage in both Tennessee and Texas is the federal minimum, $7.25 an hour. Less than half of California’s current $15.50, and one-third what the new fast-food minimum could be in 2025 if this new initiative fails.

Of course, In-N-Out likely will pay more than that $7.25 in Tennessee. And it’s already paying $12.25 in Texas. But the point is, despite some new stores such as the one in Huntington Beach, the company is looking elsewhere for expansion. AB 257, if it is not repealed by the initiative, would be another kick out the kitchen door.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.