Vice President, Labor Policy, U.S. Chamber of Commerce
September 08, 2022
On August 29, the California legislature passed the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act or AB 257), a radical proposal to micro-manage the fast-food restaurant industry, as this blog reported last week. Following its passage, the bill went to Governor Gavin Newsom for his consideration, and despite urging from the business community to veto the bill and opposition from his own Department of Finance, the governor signed it into law on Labor Day, September 5.
As enacted, AB 257 establishes a 10-member “Fast Food Council” whose members will be appointed by the Governor, the Speaker of the Assembly, and the Senate Rules Committee. The council will be empowered—actually, required—to dictate various terms of employment for all fast-food restaurants whose brands have more than 100 locations nationwide.
According to the legislative counsel’s digest, “the purpose of the council would be to establish sectorwide [sic] minimum standards on wages, working hours, and other working conditions related to the health, safety, and welfare of, and supplying the necessary cost of proper living to, fast food restaurant workers….”
In other words, AB 257 is essentially creating a form of sectoral bargaining more commonly seen in other countries. That concept is anathema to American labor policy, which is generally covered by the National Labor Relations Act (NLRA), the 1935 federal law that contemplates bargaining between individual businesses and labor unions.
A key component of the NLRA includes the fact that to serve as the bargaining representative of employees at a given business, labor unions must garner support from the employees whom they hope to represent. Sectoral bargaining, by contrast, generally involves negotiation between unions and employer associations, but it omits the type of democratic representation the NLRA seeks to protect.
Inasmuch as the law essentially obviates the need for unions to gather such support or negotiate with employers at all, the enactment of AB 257 represents yet another sop to organized labor, which lobbied hard for the legislation. Instead, it will allow unelected bureaucrats to impose terms on businesses by fiat, and whether these bureaucrats would even understand the implications, economic or otherwise, of their diktats hardly seems likely to be a job qualification.
Meanwhile, the council will be charged with “supplying the necessary cost of proper living to… fast food restaurant workers,” – but what does that actually mean? Some observers project that it might mean wages as high as $22 per hour, which, in an industry with tight profit margins, will do one of a few things: drastically drive prices up for consumers; force employers to utilize technology that requires fewer actual employees (i.e., increase unemployment); or cause employers to go out of business – none of which sound especially palatable.
As if experiments in central planning had never been tried—and failed—before, the California legislature has once again passed another piece of destructive legislation. One might be forgiven for predicting that AB 257 will likewise result in another economic calamity.