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California: 10,000 fewer jobs in just two months thanks to Newsom's minimum wage law

President of the California Business and Industrial Alliance, Tom Manzo, revealed that due to the application of the rule thousands of jobs have been lost and assured that the measure puts companies in a situation of "greater danger."

Gavin Newsom,

(Gage Skidmore/Flickr)

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Verónica Silveri Pazos

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The president and founder of the California Business and Industrial Alliance, Tom Manzo, commented before Fox that since the month of April (when the $20 per hour minimum wage law went into effect) nearly 10,000 people in the state's hospitality industry (especially in restaurants) have lost their jobs.

Manzo assured that the law - signed, promulgated and publicly supported by the Governor Gavin Newsom - has caused an "all-out assault" on private businesses (restaurants), and stated that state lawmakers seemed to live in a "fantasyland" when they noted that the pay raise would help employees and businesses:

California businesses have been under total attack and total assault for years (...) It's just another law that puts businesses in greater danger.

Results of the law: increases in food prices

Some well-known fast food chains and franchises ( McDonald's, Burger King, In-N-Out Burger ) have been forced to raise prices at their locations located in The Golden State to compensate for the minimum wage increase they had to make to their employees. Manzo stated:

You can only raise prices (..) And you are seeing it. People aren't going to pay $20 for a Big Mac. It's not going to happen.

According to the New York Post, many restaurants reduced working hours to compensate for rising wages. Others, including some well-known pizzerias, cut jobs. In December, Southern California Pizza Co. announced it was laying off more than 840 delivery drivers. This also affected the Pizza Hut franchise, which presented notices stating that to comply with the wage law they had to interrupt their delivery services.

Establishments closing

One of the large chains that have been hit hard by the new law is Rubio's Coastal Grill, which announced the closure of 48 "underperforming" establishments in the state. (These locations are equivalent to a third of the total facilities in operation in The Golden State, Nevada and Arizona .)

According to information from the Los Angeles Times, the closure is due to the "increasing cost of doing business in California" and follows a "review of its operations and the current business climate." The chain did not comment on how many workers lost their jobs, but did say it will continue operating at its other 86 locations. A company spokesperson stated:

Making the decision to close a store is never easy. Rubio's Coastal Grill, home of the Original Fish Taco, after a thorough review of its operations and the current business climate, has decided to close 48 underperforming locations, while keeping 86 stores open in California, Arizona and Nevada. The closures were prompted by the rising cost of doing business in California. Although painful, the store closures are a necessary step in our long-term strategic plan to position Rubio's for success in the years ahead.

This is not the first case of food establishments closing due to financial difficulties. Seafood chain Red Lobster filed for Chapter 11 bankruptcy last month after closing dozens of stores.

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