How Increases in Worker Compensation Could Affect Limited-Service Restaurant Sales and Competitiveness
How Increases in Worker Compensation Could Affect Limited-Service Restaurant Prices
Addendum: How Increases in Worker Compensation Could Affect Limited-Service Restaurant Prices
Millions of Californians go to counter service restaurants every week, the vast majority of whom are price sensitive. As inflationary pressures have increased throughout 2022, restaurants have worked to hold price increases below other food sectors (13.1% for grocery compared to 7.6% for restaurants year over year in July). Support for AB 257 declined ten points since March with less than a third of voters (32%) in support of the policy. Voters expect policymakers to address price increases, not exacerbate them.
EPI publicly released a study analyzing nearly a decade of data from the California Department of Industrial Relations (DIR) on alleged labor law violations. The data shows conclusively that fast food restaurants have far fewer wage claims as compared to other industries, undermining advocates’ case for AB 257.
Finance is opposed to this bill because it creates significant ongoing costs at DIR. Additionally, it creates a sector-specific rule-making body within DIR, which could lead to a fragmented regulatory and legal environment for employers and raise long-term costs across industries. Finally, it is not clear that this bill will accomplish its goal, as it attempts to address delated enforcement by creating stricter standards for certain sectors, which could exacerbate existing delays.