California’s New War on Burger Bargains

California lawmakers this month are considering a fast food bill that would significantly shift the relationship between restaurant workers and the corporate chains whose products they sell.

If Assembly Bill 257 passes, California would be the first state to assign labor liability to fast food corporations and not just their individual franchise owners.

The bill’s provisions would let workers and the state name fast food chains as a responsible party when workers claim minimum wage violations or unpaid overtime at a franchise location…

It’s part of a larger bill pushed by unions to more strictly regulate fast food businesses. AB 257 also includes a measure to create a state-run, fast food sector council to set wage and labor standards across the industry.

A new state bureaucracy with the single mission of policing wages at just one segment of the restaurant business? A highly competitive industry has made food bargains ubiquitous and somehow this is now intolerable to California politicos. Like all bad policy ideas, this one is moving quickly in Sacramento. Ms. Kuang adds:

Last week the bill survived the “suspense file” process, where controversial bills often are quietly killed. After clearing the Senate Appropriations Committee, the bill awaits a vote on the floor.

Gov.

Gavin Newsom

has not stated a position on the bill, but his Department of Finance opposes it, saying it would create “ongoing costs” and worsen delays in the state’s labor enforcement system.

If Mr. Newsom dreams of someday marketing himself to swing voters outside of California, here’s a golden opportunity to start filling out that empty section of his resume marked, “policy moderation.” He will need to say no to big labor, which has largely failed to unionize the fast-food industry and wants to see some political muscle applied. Ms. Kuang notes:

The Service Employees International Union and its Fight for $15 campaign led a series of strikes this summer to rally for the bill’s passage, including an overnight rally at the Capitol this week…. SEIU and Fight for $15 say the industry is rife with labor violations.

Not true, according to a study from the Employment Policies Institute, which states that “no credible data have been presented to justify why the industry should be singled out for special regulatory attention and oversight.” The report adds:

Limited-service restaurants account for only 1.6 percent annually of total average wage claims filed with the state Division of Labor Standards Enforcement (DLSE) for the period 2017 through 2022. (This is less than the industry’s 3.2 percent share of the overall employment in California.)

One almost gets the feeling that the legislation is entirely concerned with expanding the power of bureaucrats and union bosses. The former could be especially costly as the new burger-joint bureaucracy begins to expand.

Kevin Smith reports for the Orange County Register:

The legislation would create a state-run council to negotiate wages, hours and working conditions for California’s fast-food workers. And a new report suggests those changes could push higher prices onto consumers by as much as 20%.

The analysis — compiled by the UC Riverside Business Center for Economic Forecasting and Development and paid for by the International Franchise Association — comes as nearly 100 fast-food franchisees traveled Wednesday, Aug. 17 to Sacramento to speak out against the impacts of the bill, also known as the FAST Recovery Act…

The bill would require standards for minimum wages, maximum hours of work and other working conditions fixed by the state-run council, absent a valid collective bargaining agreement, and they would be enforced by the California Division of Labor Standards Enforcement.

The council would conduct a full review of those factors every three years and would be required to hold public hearings every six months where it could coordinate with various local agencies.

The bill additionally authorizes cities with a population of more than 200,000 to establish a food-sector council that could provide recommendations to the state-run panel.

Burger-joint bureaucracies in every small city?

Politicians are always telling us they intervene to make services affordable and available. Their interventions in health care and education often deliver the opposite. Now look at an industry that has made meals cheap and universally available and it is Sacramento’s favorite new target.

At last, Mr. Newsom has an opportunity to look reasonable. Will he seize the day and save the affordable burgers?

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Mr. Freeman will host “WSJ at Large” Friday at 7:30 p.m. EDT on the Fox Business Network. The program repeats at 9:30 a.m. and 11:00 a.m. EDT on Saturday and Sunday.

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James Freeman is the co-author of “The Cost: Trump, China and American Revival.”

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