Workers in California are actually struggling in light of a new minimum wage law in the state, rather than benefiting as liberal lawmakers had hoped.
The state’s new $20 minimum wage is set to take effect next month, and it will dramatically impact the bottom line of many fast food businesses. As such, many locations are starting to let workers go so they don’t have to pay those extremely high wages.
The Wall Street Journal reported recently that pizza chains have been cutting jobs rapidly in California, in an attempt to curb the potential financial repercussions of the new law.
Last year, multiple franchises of Pizza Hut that are located in California filed notices to comply with the Worker Adjustment and Retraining Notification Act. They said they would be discontinuing delivery services so that they didn’t have to pay those workers $20 per hour.
Not surprisingly, many of the jobs that were cut at these businesses were delivery drivers.
Southern California Pizza Co., for instance, announced in December that they would be laying off about 841 delivery drivers throughout California. These layoffs will affect locations of Pizza Hut in five counties in the state.
At the time the announcement was made, a spokesperson for Pizza Hut told FOX Business:
“Where select California franchisees have elected to make changes to their staffing approach, access to delivery service will continue to be available via Pizza Hut’s mobile app, website and phone ordering, and the customer ordering experience will remain consistent.”
Another pizza chain, Round Table Pizza, which was founded in Menlo Park, also plans to lay off roughly 1,280 of its delivery drivers in 2024, the Journal reported. Employers who are being laid off from Excalibur Pizza LLC are delivery drivers, according to a statement issued by FAT Brands — the parent company of Round Table — to FOX Business.
The statement read:
“The franchisee is transferring their delivery services to third-party. While it is unfortunate, we look at this as a transfer of jobs. As you know, many California restaurant operators are following the same approach due to rising operating costs. We anticipate third-party delivery providers in turn will see a boost in their business, which will require additional staff on their end.”
In other words, these pizza businesses are saying that it’s cheaper for them to pay the fees to third-party delivery services such as Uber Eats, DoorDash and GrubHub, versus having on-staff delivery drivers at the $20-per-hour minimum wage.
One negative aspect of this, though, is that consumers are likely to see an increase in the fees associated with the third-party delivery apps. It’s even possible that the price of the food they order will increase as a result.
California’s new minimum wage law will apply to any fast food chain that has at least 60 locations across the U.S.
Supporters of the law claim that the majority of workers in these restaurants are no longer teenagers, but rather people who are relying on the job for their livelihood.
