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California’s Fast Food Council is an unnecessary burden

March 8, 2025

A relatively new taxpayer-funded council aims to regulate various aspects of California’s fast food industry – but though it’s barely able to perform basic functions it’s already considering sticking it to small businesses.

In its first year, the Fast Food Council has struggled to hire staff, hold meetings or even decide how its meetings will be conducted, according to a recent report by Calmatters. But despite those shortcomings, it will soon debate imposing yet another minimum wage increase.

The minimum wage for these businesses has already more than doubled in just over a decade, resulting in higher prices, reduced hours and fewer jobs, especially for kids. Meanwhile, the cost of raw materials has skyrocketed.

In other words, this is a bad time for another minimum wage hike.

COMPOSITION

The council is tasked with making major decisions around labor for the better part of a massive industry.

It’s impossible for a panel of experts to have all of the necessary information to make such important decisions effectively, making this group, which is split between business leaders and union activists with a former legislative staffer as the tie breaker, grossly unqualified for the task at hand.

Business owners know the needs of their own businesses, while union activists are experts in their own experience as workers. Neither is qualified to make industry-wide decisions. This type of central planning is popular with progressives, who ignore the lessons learned in Marxist countries like the Soviet Union. In fact, the council’s makeup, a battle between the bourgeoisie and the proletariat, more closely resembles real-life The Communist Manifesto fan lit than it does a smart solution.

I doubt union activists have any interest in considering the concerns of the industry as a whole since this whole exercise is just a way to drive non-union labor from the market. But maybe these individuals will prove me wrong.

WHY

The council’s authority over the fast-food industry is not common. Supporters said it would “promote equity solutions and maximize benefits for underserved and marginalized communities,” which of course is not true when you consider the downsides of inflation, job loss and hour reduction.

Really this just makes the lives harder of both businesses and minimum wage workers as a whole – so I guess it’s equitable in that sense.

The law is so bad it had to be negotiated in secret and Gov. Gavin Newsom tried giving an exemption to his longtime friend and political donor. It was purportedly to stick it to big fast-food chains like McDonald’s, but the vast majority of fast-food restaurants are franchises, meaning they are small businesses.

At the time, then-Assemblyman Chris Holden, the Pasadena Democrat who authored the law argued it “ensures global fast-food corporations pay their fair share and take part in ensuring franchisees have the support they need to run safe, compliant restaurants.”

It’s ironic that Holden claims to have been concerned about the impact of regulatory compliance on small businesses since he supported so many of those regulations, including this one. And though making corporations “pay their fair share” is great placard bait, the franchisees are the ones bearing the brunt of these policies.

A year ago the minimum wage on these small businesses jumped $5 (to $20), following incremental increases totaling $5 from 2017, with a more modest increase a few years earlier, more than doubling their minimum wage.

That sounds great to some people, but remember that restaurant owners operate on razor thin margins already and that’s a steep spike in labor costs. Adding another increase now, even if just $0.70 per hour, makes no sense, especially without giving time to adjust.

“It’s the fallacy of pennies,” Dr. Wayne Winegarden, an economist and my colleague at Pacific Research Institute, said, noting that this small increase will be on average a hit of around 14% to the store’s profit margin, which would force businesses to make decisions about raising prices and or cutting costs. “That seems material to me.”

INFLATION HURTS

As anyone who has gone to the grocery store recently is painfully aware, the cost of essentials like eggs, chicken, produce and basically everything else we eat has skyrocketed. Businesses have to absorb this or pass it on to the consumers. This leads to a mix of higher prices, cut hours for workers and job loss, all of which has already happened as a result of the prior increase.

According to a study by Beacon Economics, this has been particularly disastrous for workers, ages 16 to 19. Unemployment in this age group rose substantially, nearly nine percentage points, from Q1 of 2022 to Q1 of 2024. This was about 7.5 percentage points higher than the national trend. A similar, but smaller, trend was seen for the ages 20 to 24 cohort.

This is the point, though. Minimum wage laws actually force low-skilled, younger workers from the market in favor of higher-skilled union labor. That’s why unions pushed the law and gave themselves control of the council.

Meanwhile, younger, potential workers forgo the experience of these starter jobs and increases on future earnings that they won’t get as a result of entering the market later.

Most of all, these increases in the minimum wage have done little to raise standards of living. The numbers themselves are arbitrary. Why not a minimum wage of $50? Or $100? Considering the unintended consequences, it doesn’t really matter.

Instead, a better approach would be eliminating the Fast Food Council, pausing any minimum wage increase and making it easier for businesses to hire, promote and expand.

Matt Fleming is an opinion columnist for the Southern California News Group. You can find him on X, @FlemingWords

Orange County Register

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California’s Fast Food Council is an unnecessary burden

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