Gavin Newsom's Minimum Wage Hike Is HURTING, Not Helping, Workers; Businesses Close, 10k Jobs AXED

California fast food chains are feeling the Pains of Governor Gavin Newsome's minimum wage hike one California Mexican chain Rubio's Coastal grill filed for bankruptcy this week after announcing their closing 48 California restaurants because of quote the rising cost of doing business as a reminder two months ago California implemented a $20 per hour minimum wage for fast food employees of from $16 an hour and it's not just Rubios that's hurting the California business and Industrial Alliance announced nearly 10,000 jobs have been cut across fast food restaurants since Nome signed the bill into law last year the policy also means many customers are shelling out way more for a burger The Wall Street Journal reported they said quote since September when California moved to require large fast food chains to bump up their minimum hourly pay to $20 in April fast food and fast casual restaurants in California have increased prices by 10% overall outpacing All Over States all other states unsurprisingly people on the right have been quick to shame Nome over the policy's consequences beloved restaurant Rubio's Coastal grill is closing 48 locations in California due to inflation and a minimum wage increase but don't worry folks the economy has never been better Biden and Mark Cuban said so shark tanks Mark cubin responded tweeting quote when companies pay less than what someone needs to live a basic life it's often the taxpayers that subsidize the difference do you really want to subsidize with your tax dollars any employer personally as an employer I would rather pay a higher wage and figure out how to be more productive and profitable to balance it out so I definitely disagree that the economy is better than ever but I do think that if you're running a a profitable business we've seen fast food chains be more profitable than ever in recent years largely thanks to price increases but if you want to be this kind of of huge business that's doing a lot of sales and breaking in the profit you've got to be able to pay your workers what it costs to live in that area now it's interesting that we're also seeing that the FBI just raided courland management this week as a part of a huge criminal antitrust investigation actually into real page which is a software consulting firm owned by tomama Bravo one of the biggest private Equity private Equity companies in the country which is a conflict of interest right because they're turning assets like real estate and rental properties into more money for their investors and a great way to do that is with a price setting scheme so allegedly Real Page has colluded with landlords has said you know you should set the the price at this in this specific area it's significant because it's 16 million rental units that have been affected where the landlords are working together working with real page as the the central organizing uh you know unit and so for them to control about 70% of Americans multif family rental properties and what the prices are it turns out that their recommendations for what the price of units should be uh was advice that was taken 80 to 90% of the time so it it does put small businesses and restaurants in a tough position if you have this kind of Monopoly collusion going into the cost of living and now it's hurting businesses small businesses as well who can't afford to pay their workers what's required to live in the area yeah I mean I support a minimum wage I support raising it occasionally I think what California has done is very irresponsible though because I think we have to consider that this is not just affecting big corporations but also small and medium business owners that you just referenced and a lot of them frankly can't afford to pay their workers the $20 an hour minimum wage which is why we see these midsize chains closing around the state of California um the uh $20 an hour minimum wage just means that these companies are either going to have to lean on automation which we've seen McDonald's around the country uh increasingly have these kiosks that you order at as opposed to someone who actually operates the cash register they're going to lay off workers they're going to increase prices and and ultimately if those three things don't lead to them being able to make up the Lost profitability then they're going to close their doors and declare bankruptcy um Chef Andrew GRL who operates businesses in California points this out he says if you do the math if a restaurant was paying $17 an hour and workers got tips now they make $20 plus tips that's $3 extra per hour 30 workers at 40 hours per week is 12,200 hours * $3 an hour which is $3,600 extra weekly plus you have to add on the payroll tax and insurance which is $5,000 extra and weekly cost overnight due to this wage hike that's over $250,000 yearly again unless you're McDonald's or Burger King you're not able to just eat that cost and even those companies are raising prices 10% to offset the increased cost of doing business in California yeah I mean McDonald's is a company that's profiting $37 billion annually billion with the B they have 150,000 employees so if we were to divide the profits by the employees it's an extra you know $246,000 a year per employee they can absolutely afford to pay $20 an hour to all of their employees and then some they could afford to pay $40 an hour to those employees so I think any fast food chain especially big ones like McDonald's making this complaint when profits are at an all-time high and in the billions that we just can't afford to pay the workers that amount it's really that they want to keep their margins what they are they want to keep making the money and lining their shareholders Pockets so it feels a little dishonest um so when we see policies like this where minimum wages go up across the country we've actually seen that when workers are paid more they're more productive there was a study done by Kellogg Insight from 2012 to 2015 it was uh you know assessing major retailers across 2,000 different stores in all 50 states uh they employ over 40,000 sales people and they saw when their wages went up that they were more productive and they credit this productivity directly to the employees putting in more effort about 4.5% more in sales is what they saw across all of their workers thanks to to wage hikes and so I I think people like Mark cubin who's saying you know it's your job as a good business to figure out how you're going to be more productive to pay workers more true but also the opposite might be true that you you can pay your workers more and see the productivity increase as a result without any other additional input but I think businesses need to be creative to operate in an environment if they want to be as profitable as they are you know maybe share some of that profit with the workers I want us to stay on small and medium businesses though because I already conceded that some companies like McDonald's Burger King these large fast food chains that have thousands of locations throughout the United States are mostly able to to eat the cost here even if they increase prices to keep their profit margins the same they're able to handle the the the detriment of having this minimum wage hike but small and medium mom and pop shops are not and I think this is one of the big reasons why we've seen corporations really capture so much control in America over the past 5 years specifically because during the pandemic they championed all of these regulations that would kill their competitors while they were able to get richer than ever this is exactly what's going to happen with this minimum wage hike to $20 an hour is that all of their small and medium business competitors who are owned by everyday Americans who don't make millions of dollars a year in salary in fact restaurants have one of the highest closing rates for any business they have some of the smallest profit margins of any business these people often SN their life savings into opening these restaurants because they want to feed their communities they think that having a family-owned business is going to be good for the health and the culture of the community that they live in and a lot of them are going to have to close through no fault of their own so I do I don't think we can conflate a billion doll uh CEO of McDonald's with a franchise owner who again has staked everything that they have on opening this business and now they're going to have to pay $250,000 extra a year which a lot of them simply cannot afford yeah it's interesting out of California the reporting I've seen is mostly chains that have decided to close down mostly chains that are making decisions about how to have the highest return to their shareholders a lot of the mom and pop shops that I used to go to when I was living in California were mostly operated entirely by the owners and the families of the owners the same people who profited or the people flipping the burgers and running the register making the tacos in the taco truck I think it's a big problem at what we're seeing across the economy is especially in Middle America especially in the South and rural areas is smaller business like Mom and Pop shops like mediumsized businesses uh you see big box stores like Walmart like Target come in you see the Marshalls and the TJ Maxx and the same strip malls in every single City and I think people are sick of that I think people Miss higher quality products and more diversity but it is a constraint that because people aren't paid very much they feel like they have to shop at Walmart and then because a lot of the smaller businesses are not making the same Revenue because a lot of the business is now going to these big stores that can afford to just move in and set up shop build completely from scratch a new facility something that small mom and pop shops can't do especially at a new location it's just really sad to see them lose all of that business and then they have to raise prices and then suddenly they're not affordable and so I think there should be some creative policym in cities across the country around who's allowed to come in who's allowed to replace the businesses people used to rely on at the town square at the old downtowns why is shopping now happening at such a large scale with these huge corporations and what can we do about it because I not only think it's you know just sad to see people paid low wages getting low quality products but also just as someone who who likes shopping who likes going out in a bow just seeing the same stores in every single city is extremely depressing it feels like the kind of nightmare we're told as what it's like living in a communist country where everything's the same we'll be back with more Rising after this [Music]

Channel: The Hill

Views: 34,327

Keywords: Rising, Progressive, Progressive Politics, Democrats, Democratic Party, Republicans, GOP, Republican Party, California, Minimun wage, Fast Food Chain, Gavin Newsom, Cali, Burger, Taxpayers, Businesses, Loss, Labour Union

Id: FhKwKmH7LNg

Length: 11min 12sec (672 seconds)

Published: Fri Jun 07 2024