DANIEL VAUGHAN: Liberals Kill California's Economy

 June 7, 2024

On April 1 of this year, California's $20-an-hour minimum wage law went into effect. As the bill was debated, businesses warned that the increased costs would lead to price hikes and lost jobs. California Democrats rejected this as simple scare-mongering tactics from corporate America. The results are in: Democrats are destroying California's economy.

According to industry reports, nearly 10,000 people have lost jobs from the new law. The report said, "California fast food restaurants have slashed nearly 10,000 jobs because of the state's new $20 minimum wage as struggling franchises cut labor costs and raise prices to survive."

One California business, Rubio's Coastal Grill, closed 48 of its locations after the law passed. It blamed the high cost of doing business in California for the closings. Rubio's declared bankruptcy this week.

Restaurants that haven't fired people or closed are hiking prices to keep up with increasing costs. "Beverages at Starbucks stores in California were 50 cents more expensive after April 1, while Taco Bell raised menu prices by 3%, according to a recent report from Kalinowski Equity Research."

Those companies weren't alone. Industry insiders also found the following: "Marcus Walberg, whose family runs four Fatburger franchises in Los Angeles, told Business Insider in January that he was planning to raise menu prices between 8% and 10% in response to the new law. Chick-fil-A prices spiked 10.6% between mid-February and mid-April, according to data from Gordon Haskett."

California once had the resources and people to have the wealthiest economy in the country. It's now facing an affordability crisis, and its leadership is making things worse.

That's true for everyone unless you're a close friend of Governor Newsom. The Governor pushed for a private exemption from this law for his good buddy Greg Flynn, one of the largest Panera Bread franchises in the country. Flynn restaurants didn't have to follow the new wage hike. Apparently, this policy is vitally important unless you're a close personal friend.

The outcry from "PaneraGate" was so loud that Greg Flynn agreed to "voluntarily" raise the minimum wage at his restaurants in response.

You can throw a dart and find a news story showing how Americans are upset over the cost of living across the country. Instead of doing something about that, California is making the problem worse by firing people, reducing hours worked, and increasing costs for everyone. And those increased costs are on top of the inflation all of us feel.

Predictably, with the new law, businesses are hyper-focused on managing these new costs. Some companies are turning to robotics and automation as the solution. You can walk into places like McDonald's and order from self-serve kiosks or via the phone app. The people behind the register are gone, and equipment in the back may be fully automated, too.

The innovation doesn't stop there, though. The LA Times reported that some businesses were rapidly increasing the adoption of artificial intelligence services. AI is being used in conjunction with self-service kiosks and other tools to reduce the human footprint.

One franchise owner told the LA Times, "the [self-serve] kiosks might save five hours of labor a day. By that estimate, the machines would pay for themselves within a year and shave about 20% of the increased cost from the latest minimum wage increase. "We're chipping away at it," she said."

"Chipping away at it" is a kind way of blaming the state for changing your entire business model. These stories are all too familiar in California, and we're only a few months into this law controlling.

It's no wonder that Californians are fleeing the state in droves. You can't even make a simple living without Gavin Newsom and crew making that task impossible. It's not that wanting better wages for people is a bad thing. But you've lost the plot when you make that the focus instead of jobs at all.

That's California on so many topics—a state that can't get out of its own way. Whatever good exists is taxed into oblivion. Meanwhile, major city centers are host to the kind of tent city slums normally reserved for third-world countries. It's as if everyone is super rich or facing destitution. Everyone in the middle is incentivized to leave.

If it wasn't clear by now, the progressive experiment in California is a failure. A once prosperous state faces ruin from the forces running the state capital. Decline is a choice. The problem for California is that the state legislature installed an express lane for decline.

Hopefully, this once great state will find its moorings and establish itself as one of the best places in the country. For now, it's a crumbling sign of progressivism's excesses and failures.

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