Elected leaders could help all restaurant workers by learning from California's mistakes

Rhea-AI Summary

In an open letter, Joe Erlinger, President of McDonald's USA, expresses his support for raising minimum wages nationwide while criticizing California's AB 257 bill. He argues the bill unfairly targets certain restaurants, imposing wages up to $22 per hour, which could increase costs for quick service restaurants in California by 20%. Erlinger emphasizes that legislation should benefit all restaurant workers fairly, rather than creating disparities among different types of businesses. He calls for a dialogue on wage increases that ensure equitable treatment across the industry.

Positive

• Strong endorsement of higher wages for all workers.
• McDonald's successfully operates in high wage environments.

Negative

• AB 257 imposes unfair wage increases on certain restaurants, impacting operational costs.
• Possible 20% increase in quick service restaurant prices in California, affecting consumer spending.

The following is an open letter from Joe Erlinger, President of McDonald's USA 

CHICAGO, Aug. 31, 2022 /PRNewswire/ -- As President of McDonald's USA, it may come as a surprise to hear that I support raising minimum wages for workers. In fact, I welcome legislation that increases wages for all workers.

I also welcome a dialogue on legislation requiring mandatory training around safe, inclusive and respectful workplaces – something already underway at every McDonald's worldwide.

When done thoughtfully, fairly and applied across an even playing field, this kind of legislation can be highly effective.

But California's state legislators have just passed a bill called AB 257, which is now flying to Governor Newsom's desk, and will do the exact opposite.

Its proponents say their bill should be a model for other states (and special interest groups are directing money to make this a reality). This should raise alarm bells across the country.

That's because California's approach targets some workplaces and not others. It imposes higher costs on one type of restaurant, while sparing another. That's true even if those two restaurants have the same revenues and the same number of employees.

Let me explain how. If you are a small business owner running two restaurants that are part of a national chain, like McDonald's, you can be targeted by the bill. But if you own 20 restaurants that are not part of a large chain, the bill does not apply to you. For unexplainable reasons, brands with fewer than 100 locations are excluded. Even more mystifying, the legislation excludes certain restaurants that bake bread. I can only conclude this is the outcome of backroom politicking.

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

Putting aside so many problems with the bill, it could require single-location franchise owners of these large chain restaurants to pay workers $22 per hour by as early as 2023—40% more than the current hourly wage in California.

Aggressive wage increases are not bad. McDonald's, for instance, operates very successfully in high wage environments across the country and around the world, and in places that require more than $22 in all restaurants.

But if it's essential to increase restaurant workers' wages and protect their welfare – and it is – shouldn't all restaurant workers benefit?

This lopsided, hypocritical and ill-considered legislation hurts everyone. Many economists who have studied this issue agree this bill is problematic, as has the state's own Department of Finance.¹

Economists say it could drive up the cost of eating at a quick service restaurant in California by 20% at a time when Americans already face soaring costs in supermarkets and at gas pumps.

California is my birth state and it's hard to watch it earn its reputation for driving businesses out of the state.

But this isn't just a cautionary tale for California's customers, workers, and business owners. Proponents of this bill have made it clear they want to see it expand across the country, regardless of whether Governor Newsom signs the bill into law. That would be terrible.

They are also encouraging voters everywhere to ask their lawmakers to adopt California's counterproductive model in their own states.

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.

Once again, California is not leading the way. We should all demand better and I welcome a productive dialogue with elected leaders across the country.

Joe Erlinger President, McDonald's USA

1 https://esd.dof.ca.gov/LegAnalysis/getPdf/066D8BA5-C012-ED11-913B-00505685B5D1

About McDonald's USA

McDonald's USA, LLC, serves a variety of menu options made with quality ingredients to millions of customers every day. Ninety-five percent of McDonald's approximately 13,500 U.S. restaurants are owned and operated by independent business owners. For more information, visit www.mcdonalds.com, or follow us on Twitter @McDonalds and on Facebook at www.facebook.com/mcdonalds.

 

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SOURCE McDonald's USA

FAQ

What is McDonald's position on minimum wage legislation as of August 2022?

McDonald's President, Joe Erlinger, supports raising minimum wages for all workers, while opposing California's AB 257, which he argues unfairly targets specific restaurants.

How does AB 257 affect McDonald's franchise owners in California?

The bill may require single-location franchise owners to pay up to $22 per hour, significantly increasing their operational costs.

What are the potential financial impacts of AB 257 on quick service restaurants in California?

Economists warn that AB 257 could raise costs for quick service restaurants by 20%, impacting customer prices and business viability.

Is McDonald's concerned about the spread of California's AB 257 to other states?

Yes, Joe Erlinger cautions that proponents of AB 257 want to replicate this model nationwide, which could harm the restaurant industry.