McDonald's US president says California's newly created fast-food council that could raise minimum wage to $22 at its restaurants 'hurts everyone'

1 year ago 267
  • McDonald's US president said California's fast-food council is unfair and "hurts everyone."
  • The fast-food council would be able to raise minimum wage up to $22 at McDonald's and other chains.
  • Joe Erlinger said increasing wages is "not bad," but warned it could increase the cost of fast-food.

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In a letter published on Wednesday, Joe Erlinger, the president of McDonald's US, said California's bill to set up a 10-person fast food council is "lopsided, hypocritical and ill-considered," and "hurts everyone."

"As President of McDonald's USA, it may come as a surprise to hear that I support raising minimum wages for workers," Erlinger wrote. "In fact, I welcome legislation that increases wages for all workers."

Erlinger said the legislation, which also requires training to make workplaces "safe, inclusive and respectful," can be "highly effective" if it's done fairly. But, he followed, the bill by California state legislators, "will do the exact opposite."

California's state senate just passed AB 257, the FAST Recovery Act, to create a 10-person council made up of fast-food workers, restaurant representatives, and government officials that would have authority to establish minimum wage and standards on conditions for worker health and safety.

The council would have authority over restaurant chains that have over 100 locations nationally, like McDonald's does, and can raise the fast food industry's minimum wage to $22 an hour. Currently, California's wage floor is $15.00, and will raise to $15.50 in 2023.

Erlinger's criticism of California's fast food council is that it "targets some workplaces and not others."

"It imposes higher costs on one type of restaurant, while sparing another," he said. "That's true even if those two restaurants have the same revenues and the same number of employees."

He went on to explain that a small business owner can be affected by the bill if they run two restaurants that are part of a national chain. But a business owner who owns 20 restaurants would not be affected if none of their restaurants belong to a national chain.

Erlinger said it's "unexplainable" why chains with less than 100 restaurants, and some restaurants that bake bread, are excluded. His conclusion of the bill, he said, is that it's "the outcome of backroom politicking."

"This is a clear example of picking "winners" and "losers," which is not the appropriate role of government," Erlinger wrote.

Erlinger wrote that increasing wages to $22 is not bad, noting that McDonald's can operate well in places around the world with higher minimum wages.

"But if it's essential to increase restaurant workers' wages and protect their welfare – and it is – shouldn't all restaurant workers benefit," he wrote.

Economists and California's Department of Finance agree the legislation is "problematic," Erlinger wrote, because it could increase the cost of food at fast food restaurants in California by 20%, while food and other prices are already high from inflation.

Erlinger warned that the bill, even if it isn't signed by California Governor Gavin Newsom, would inspire similar bills around the country. 

"Rather than asking for what many have decried as the "California Food Tax,"  those who count on a thriving restaurant industry—workers, owners and customers— should be asking lawmakers to only consider legislation that benefits all," Erlinger wrote.

McDonald's isn't the only chain speaking out against the California bill. Other chains like Chipotle and Chick-fil-A, who would also be affected by the bill, have lobbied lawmakers in California to vote against the bill.

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