The following is an open letter from Joe Erlinger, President of McDonald’s USA
Released: Jan. 25, 2023 at 5:21 p.m. EST|updated: 3 hours ago
CHICAGO, January 25, 2023 /PRNewswire/ — Whether you’re a legislator, a business owner or executive, or an everyday voter, one thing is clear: California has become a dramatic case study for choosing bad politics over good politics.
Last fall, lawmakers passed legislation — AB257, or the FAST Act — almost entirely at the behest of organized labor, which had a firm grip on many of the state’s lawmakers. It makes it all but impossible to run small business restaurants, but the impact goes far beyond that. Under the FAST Act, an unelected council of political insiders, non-local business owners and their teams would make big decisions about critical elements of running a business, disrupting the economy in the process.
As the head of McDonald’s US operations and a native of California, I had reason to pay particular attention to the bill and its passage. But the impact of the legislation — and the lessons to be learned from it — matters to all of us, especially as the Golden State seeks to act as a model for the rest of the country.
Proponents argued that the bill was about helping everyone — especially hard-working people who work in restaurants. But the facts just don’t support it.
There is no evidence that the FAST Act better meets workers’ needs. That is not only my opinion, but also the conclusion of the state’s own experts. California’s The Treasury Department said: “It is not clear whether this bill will achieve its objective.1“The Department of Industrial Relations (DIR) debunked a core argument of the FAST Act that wage theft in quick service restaurants was disproportionately high. In fact, DIR said wage theft was up to five times that rate lower in quick service restaurants than in other industries.2
Three of the leading and most credible media outlets in the country – The Wall Street Journal, Washington Post and Bloomberg – unanimously said the bill was based on false promises, with one merely stating that it was a “prescription for higher restaurant prices and slower business and job growth”.3“
Economists estimated that AB257 would drive up the price of food at a New York fast food restaurant California by 20% at a time when people can least afford it.4
Even more confusing are last-hour exceptions that smack of backrooms and special-interest negotiations Sacramento (or maybe Napa Valley). A carveout says 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 this pit local businesses against each other and undermine the goal of helping Everyone restaurant employees.
So how did it come to this?
After years of work and hundreds of millions of dollars, organized labor has failed to meaningfully expand its contributory membership base in new industries. For example, assume that union density in the US in 2022 (10.1 percent) was the lowest on record (1983, the first year in which data are available, union density was 20.1 Percent). Unions gained just 273,000 members in 2022 after four consecutive years of membership Rejects in previous years.5
Put simply, organized labor has failed to get through the front door – to give workers the opportunity to do so on a day-to-day basis Select if they want a union. So it asked for a back door – pushing Sacramento Lawmakers to introduce, pass and sign bad policies that hurt small businesses, workers and consumers.
The top leader of organized labor said legislation like AB257 “is how we’re going to win the union part of our journey.6“By effectively creating a union bargaining table within government, taxpayers will foot the bill for organized labor’s membership campaign.
More than 1 million Californians took note and said they wanted the fate of this bill to be decided in the vote before it bears its burden by being used California’s Century-old referendum process to stop him. This procedure was created more than 100 years ago to give people the opportunity to check special interests.
but California’s Lawmakers didn’t want voters (or the state’s constitution) to stand in the way of their deals. So politically appointed government officials moved quietly to enforce the law in the quiet cloak of the holiday season.
As a 20-year employee of a company that operates in many different political settings across the country and around the world, this looks a lot more like autocracy than democracy.
California Legal experts were outraged that the state “failed to respect the people’s right to approve laws before they come into force.7” The Wall Street Journal said it was an embodiment of the decline of democracy in the state and suspected that it was another reason for the relocation of people and businesses.8th
A judge inside California finally the state ordered it to stop until the people had their say at the polls November 5, 2024. And despite the court’s decision, politically appointed staffers went ahead and filed an application 12 million dollars and an army of highly paid lawyers to implement AB257.9 That’s just a drop in the bucket of what’s likely to come.
Let me be clear: we support legislation that leads to meaningful improvements in our communities, including responsible increases in the minimum wage. Our business thrives when our people and communities thrive.
we Welcome and support laws that level the playing field and apply to all industries and all workers. We support legislation that has clear, meaningful, positive and transparent outcomes for the wider community and our restaurant teams. We welcome legislation that supports small business owners and the franchise business model—and does not limit our ability to engage and meet the needs of employees and is consistent with our values.
There are big, important issues that require legislators’ attention: inflation and rising costs, a deficit10 in which California State budget, real estate crises and economic uncertainty. Implementing costly and job-killing legislation like AB257 is not the answer.
The state is giving us a powerful lesson about what our future might look like if this one-sided style of democracy is emulated elsewhere or left unchecked in the Golden State. And that threat is real – just last week a Virginia Legislators imported from California introduced an almost identical law11 that the heads of state now have the opportunity to stop in his footsteps. And no doubt they will keep looking for backdoors California.
Happily, 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 band together and make better demands.
Jo Erlinger President, McDonald’s USA
1California Department of Treasury: Department of Treasury Invoice Analysis
2Employment Policies Institute: Not So Fast: Analysis of Labor Law Compliance in California Fast Food Restaurants
3WSJ: California’s Fast Food Bill Whopper
4UC Riverside: How an increase in workers’ compensation could affect limited-service restaurant prices
5US Bureau of Labor Statistics: Summary of Union Members, January 19, 2023
6The Washington Post: A California law stripping fast-food chefs of the power to set wages is sparking a struggle
7OC Register: An Unlikely Threat to People’s Democracy in California
8thThe Wall Street Journal: Democracy is dying in California
9California State Budget Amendment Proposal
10The bond buyer: Faced with a deficit, California Budget plan brings back bonds
11HB 2478: Fast Food Industry Workers Standards Board
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SOURCE McDonald’s United States of America
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