McDonald’s chief: California wage law is job destroying

The FAST Act, a California bill that would regulate fast food industry wages, is a costly job-destroying law and reflects autocracy and not democracy.

That’s the view of Joe Erlinger, president of McDonald’s USA, in a public letter he released late last week regarding the AB25 legislation California leaders approved in the fall of 2022 and was set to go into effect Jan. 1 of this year.

The bill, after a hefty lobbying effort by fast-food industry leaders and local restaurants, will now need public voter approval to go into effect.

As QSRWeb reported in October, 2022 big food chains, including Chipotle Mexican Grill, Starbucks and McDonald’s, raised over $12 million in efforts to reverse the law that could put the minimum wage in the fast food industry at $22 an hour. The state’s current minimum wage is $15 an hour.

“As a 20-year member of a company that operates in many different political environments around the country and around the world, this looks much more like autocracy than democracy,” Erlinger wrote in the letter, adding the legislation will destroy business growth through “bad policy and bad politics.”

“Whether you’re a lawmaker, a business owner or leader, or an everyday voter, one thing is clear: California has become a dramatic case study of putting bad politics over good policy,” he wrote, stating the act will make it “all but impossible” to run small business restaurants.

The FAST Act has been roundly supported and driven by labor unions. Erlinger claims the unions are supporting the law to boost its membership ranks.

“As the head of McDonald’s U.S. business and a native Californian, I’ve had reason to pay particularly close attention to the bill and how it passed. But the fallout from the legislation — and lessons to be learned here — matter to all of us, particularly as the Golden State tries to emerge as a model for the rest of the country,” Erlinger wrote.

In his letter the McDonald’s chief listed out a slew of reasons why the legislation is not beneficial, citing California’s own department of finance and industrial relations division, as well as top media opinions and view of the legislation.

“Even more perplexing are final-hour exemptions that reek of backroom, special-interest negotiations in Sacramento (or maybe Napa Valley). One carveout says that the law doesn’t apply to certain restaurants that bake bread on-site. Another exempts restaurant brands with fewer than 100 locations nationwide. Carveouts like these pit local businesses against each other and undermine the goal of helping all restaurant workers,” he wrote.

“As a 20-year member of a company that operates in many different political environments around the country and around the world, this looks much more like autocracy than democracy.”

The law will go before voters on Nov. 5, 2024.

“Fortunately, California voters will have their say in 2024. In the meantime, if you see special-interest legislation like this coming your way, workers, consumers and small business owners need to unite and demand better,” wrote Erlinger.