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The bizarre revival of the Industrial Welfare Commission

June 30, 2023

California voters have had the power of referendum since 1911. By collecting a required number of signatures on a petition within a set time frame, voters can immediately force a halt to the implementation of a law passed by the legislature and signed by the governor. That law then goes on the ballot for voters themselves to approve or reject.

The people’s power of referendum is an important check on the power of lawmakers to impose unpopular measures on an unwilling population. Dealmaking with special interests in the Capitol may result in a law being passed that does not have the support of a majority of Californians, and a referendum is an outlet for voter anger.

So of course, the power of referendum is unpopular in the Capitol.

This year, lawmakers have used the budget process to sabotage a referendum that will appear on the November 2024 ballot. That measure will offer voters the opportunity to decide the fate of Assembly Bill 257, a law passed last year that creates a “Fast Food Council” within the state Department of Industrial Relations. According to the Legislative Counsel’s Digest, “The purpose of the council would be to establish sectorwide minimum standards on wages, working hours, and other working conditions related to the health, safety, and welfare of, and supplying the necessary cost of proper living to, fast food restaurant workers.”

Gov. Gavin Newsom signed AB 257 in September, and business interests quickly qualified a referendum. The law is on hold until voters weigh in.

However, the freshly negotiated budget deal between Gov. Gavin Newsom and legislative leaders includes a line item providing $3 million to fund the state’s previously defunded Industrial Welfare Commission. The IWC dates back to the early 20th century. It regulated wages and working conditions in different sectors of the economy, issuing orders that in some cases are still in effect. However, in 2004, the commission was defunded to prevent Republican governor Arnold Schwarzenegger from using it to change union-supported work rules.

Now the commission will be resurrected with $3 million of funding, enough for a brazen effort to nullify the voters’ power of referendum over AB 257, the Fast Food Accountability and Standards Recovery Act.

The funding is conditioned on the Industrial Welfare Commission prioritizing industries in which at least 10% of workers are at or below the federal poverty level. According to the University of California-Berkeley Center for Labor Research and Education, that includes employees of fast-food restaurants in California.

What a coincidence.

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By another coincidence, the commission has until October 2024 to report on its findings, after it investigates wages paid across the relevant employment sectors and determines if they are “inadequate to supply the cost of proper living.” The findings will be released just as ballots for the November election are mailed to every registered voter.

So one way or another, regardless of what voters think about it, wages and working conditions specifically in the fast-food industry in California will be regulated by a state agency, almost certainly causing prices to rise.

California’s political leaders are arrogantly imposing unique mandates on industries they disfavor at the behest of their political supporters, in this case, labor unions that have targeted franchisees, small business owners who have for decades provided entry-level jobs for California residents.

Orange County Register

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The bizarre revival of the Industrial Welfare Commission

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