4 reasons Gavin Newsom's new fast food law is a recipe for disaster

foxbusiness.com:

Chef and restaurant owner Andrew Gruel discusses Gov. Newsom signing a landmark fast food workers bill despite concern it will drive up consumer costs on ‘Fox Business Tonight.’

California Governor Gavin Newsom recently signed a bill that raises the minimum wage for fast food workers to $20 an hour and creates a council that can approve further increases. The bill, AB 1228, was hailed by labor activists and fast-food workers as a historic victory for their rights and dignity. 

However, we have serious doubts about the wisdom and effectiveness of this law. We believe it may have unintended and harmful consequences for the fast food industry, its workers, and its consumers.

First, the law will lead to higher prices and lower quality for fast food products. Researchers at the Federal Reserve Bank of Chicago and the Department of Agriculture found that a 10% increase in the minimum wage raises fast-food restaurant prices by approximately 1.5%. This finding would suggest that a $20 minimum wage, which is a 29% increase from the current $15.50, would raise fast-food prices by about 4.4%. This estimate may not seem like a lot, but it could make a difference for low-income consumers who rely on fast food as an affordable and convenient option. Moreover, higher prices will likely reduce the demand for fast food, hurting the sales and profits of fast food chains and franchisees.

Second, the law will reduce the employment and hours of fast-food workers. According to a recent study by the Congressional Budget Office, a $15 federal minimum wage would reduce employment by 1.4 million workers nationwide, or nearly 1%. A $20 minimum wage in California, a much higher and more concentrated increase, could have an even more significant