Assembly Bill 1228 enforces a $20 minimum wage for fast-food workers, an increase of $4.50 from previous wages, effective April 1. Every worker deserves a fair wage to live and thrive, and this bill addresses that. However, it is imperative to note the major drawbacks of A.B. 1228’s implementation. The main concern is that this bill will give big corporations, like Pizza Hut, an excuse to cut costs in ways that will hurt hard-working employees.
The minimum wage in California has been cited as increasing steadily over the past decade, with inflation growing alongside it. As product prices increase, it is important to recognize the negative impact this will have on low-income families. If wages are stagnant while inflation increases, these families won’t be able to afford to live in California. There is little doubt that this increase in the minimum wage is clearly needed to help struggling individuals survive and thrive in an inflated environment.
Though the increase of $4.50 for minimum wage might stimulate the economy, government officials must remember that business owners are encouraged to transfer the cost of higher wages. It is concerning because of the choices this legislation will encourage business owners to make. While some may take time to implement methods that benefit the best of their company and employees, others may prioritize the company’s health and decide based on what will raise its profit over its workers.
A.B. 1228 affects more than fast-food employees. Managers of fast-food corporations are allowed to make up for the costs of increased employee wages. In response to this new bill, Pizza Hut plans to lay off around 1,100 delivery drivers. Delivery drivers have been disadvantaged compared to the rest of the food-delivery market with the popularity of Uber Eats and DoorDash. The layoffs were a quick and easy way for Pizza Hut to react versus trying to come up with a more comprehensive solution. These layoffs are caused by a change in demand for the drivers’ services.
Other options for fast-food chains to meet minimum wage requirements include mobile-order self-service, scheduling fewer employees during slow hours, more scheduled employees during peak hours and loyalty rewards programs. Implementing a mobile-order service option will allow consumers to input their orders without stepping foot inside the restaurant. Additionally, this will eradicate human error between the cashier and consumer, getting food out much quicker. Having more organized scheduling for employees will reduce costs of labor assuming employees are paid hourly. This way, the corporation can allocate its resources and employees efficiently without wasting money scheduling too many at one time. Implementing a loyalty program will also combat high wages by increasing consumer sales and demand. Many fast food chains have reward programs where if someone spends a certain amount of money, he or she will receive a free dessert or meal.
California’s A.B. 1228 clearly has good intentions for California’s economy and population. Nonetheless, this prime example of government intervention has drawbacks and almost encourages business owners to combat it through layoffs or other methods. This represents the very real possibility that more businesses will employ this tactic using the wage hike as cover.
