California is already beginning to see the consequences of raising its minimum wage for certain workers as fast-food chains begin to slash their workforces in response to the hike to $20 per hour.
The layoffs come ahead of the April 1 implementation of the new minimum wage increase approved by the Democrat-led state Assembly in Sacramento.
Fast-food businesses — especially pizza chains — have begun rolling out plans to cut their payrolls, The Wall Street Journal reported Monday.
Pizza Hut and Round Table Pizza will eliminate more than 1,200 delivery driver jobs, according to state records that companies must file when laying off a large number of workers.
Michael Ojeda, who was a Pizza Hut driver for eight years, was told by his employer that his last day of work was in February, the Journal reported.
Trending:
The now-former employee blasted the company.
“Pizza Hut was my career for nearly a decade and with little to no notice it was taken away,” Ojeda said.
Round Table, a chain based in Menlo Park, California, with about 400 restaurants, said delivery services will pick up where its former employees left off.
“We anticipate third-party delivery providers in turn will see a boost in their businesses, which will require additional staff on their end,” a spokesman for Round Table Pizza said in a statement, according to the Journal.
Is a higher minimum wage bad?
“That said, delivery service fees may increase, and the customer will most likely see even higher prices as a result of this ongoing shift,” he said. “This is the reality of today’s restaurants.”
Brian Hom, the owner of several Vitality Bowl locations, said he is cutting down on employees as well because of the minimum wage increase.
“I’m definitely not going to hire anymore” Hom said, according to the Journal.
Several restaurant chains said they would be increasing menu prices to make up for the higher operation costs being forced upon them by the new state law.
Not all restaurants, though, have been forced into the 25 percent per hour increase in wages.
Panera Bread was given a waiver from the minimum wage law after Democratic Gov. Gavin Newsom carved out an exemption for the national chain.
Newsom was able to exempt Panera by adding a provision to the Fast Food Accountability and Standards Recovery Act allowing companies that make bread as a “standalone” item to skip out on having to pay the higher minimum wage.
Greg Flynn, the billionaire CEO of Flynn Restaurant Group and owner of about two dozen Panera sites, has been a close friend of Newsom’s since high school, according to Bloomberg. He also has been a huge donor to Newsom’s political machine.
California’s Panera Bread locations were hit with a boycott following reports about the chain’s exemption from the state minimum wage increase.
