Your cheeseburger and fries are going to cost more. So is the medical bill for treating the subsequent heartburn.
Two minimum wage bills Gov. Gavin Newsom signed already are digging in, worsening the inflation hitting consumers. The overall state minimum wage will rise from $15.50 an hour to $16 on Jan. 1. But Assembly Bill 1228 increased the minimum wage for fast-food workers even higher, to $20, effective next April 1, for those brands with 60 or more restaurants nationally.
Restaurants already are planning to pass the higher wage on to consumers. BJ’s Restaurant has 59 stores in California and its headquarters are in Huntington Beach. “We expect higher menu prices in restaurants throughout the state as operators look to mitigate the added costs,” CEO Greg Levin announced during an earnings call last week. “We are still finalizing our menu pricing plan for next year, but expect to be able to offset inflationary pressures.”
Senate Bill 525 increased the minimum wage for most healthcare workers to $23 an hour next July 1; $24 on July 1, 2025; and $25 on July 1, 2026. Great for those workers — if they’re not laid off. But the costs will be passed on to patients and taxpayers.
Gov. Newsom’s own Department of Finance just estimated the wage increase would cost the state government alone $4 billion more a year. Half would come from federal funds; but half will receive a transfusion from the state general fund, meaning California taxpayers. That would add $2 billion to the current estimate of a $14 billion deficit for the fiscal year beginning July 1, 2024. The $4 billion estimate does not include costs to private health care offices and systems, which could be much higher.
“Increasing the minimum wage always results in higher prices to the consumers,” Raymond Sfeir told us; he’s the director of the A. Gary Anderson Center for Economic Research at Chapman University. He pointed out the $20 fast food wage won’t apply to brands with 59 or fewer places, giving them an advantage. Companies growing fast will have a strong incentive to not rise above 59. Many firms might not even come here, meaning fewer jobs in the Golden State.
A shortage of healthcare workers was the excuse Newsom made for increasing their wage. But if that’s the case, Sfeir pointed out, why were such workers defined as also including janitors, gardeners, drivers and gift-shop clerks? And how about helping health workers — and all workers — by reducing the cost of living in this state with tax cuts and more housing?
Sfeir warned, “When healthcare costs increase, families with limited means are affected more than anybody else, leading them to demand fewer healthcare services.”
Both these bills were pushed strongly by unions, especially the powerful Service Employees International Union. Laphonza Butler, gifted a U.S. Senate appointment by Gov. Newsom, is a former president of the SEIU State Council. Until union power over government is reduced in this state, expect everything to cost even more.
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