The California Legislature passed Assembly Bill 257, the Fast Food Accountability and Standards Recovery Act, on August 29, 2022. If Governor Gavin Newsom approves AB 257, California will be the first state in the nation to broadly regulate wages and working conditions for an entire industry. Fight for $15 and the Service Employees International Union (SEIU) California sponsored AB 257. Their hope is the bill will lead to European-style industry-wide unionization, and end company-by-company efforts. The fast-food industry predictably opposes the bill.

Although states, as well as the federal government, regulate several industries, like banking and petroleum, these regulations do not set minimum wage and labor standards. They do not attempt to regulate social inequities. That is why the bill is being touted by the media as “first in the nation.”

A Super Agency in the Making

AB 257 creates a council comprised of government officials appointed by the Governor, business leaders, and worker representatives. The council will draw regulation to apply to all fast food restaurants with 100 or more establishments nationally that share a common brand. The bill has broad powers to repeal or amend existing regulation to accomplish its mission of establishing wage and labor standards.

AB 257 claims its intent is not to usurp legislative powers by creating or amending statutes. However, sections of the bill seem to send a contradictory message.

Section 4 (d) (1) (B) Nothing herein restrains the Legislature from enacting legislation that prevents a standard, repeal, or amendment from taking effect.

This wording seems to say elected representatives of the people do not have the power to simply veto regulations presented by the council, but instead can if they choose create legislation that would amend or repeal the regulation.

The council created by AB 257 seems in reality to be a super-agency, whose unelected members have de facto power to make and enforce law. As such, voters have no say in rules and regulations this super-agency implements. The only recourse of unhappy voters is appeal to their California legislators to try to enact more legislation that modifies or repeals the “law” created by the council – a council they themselves created.

The council will succeed where no agency has before?

California already has numerous laws, rules and regulations regarding wages and working conditions. However, AB 257 correctly states that enforcement is ineffective and problems in the workplace abound.

Section 2 (j) Furthermore, because existing enforcement and regulatory mechanisms have proved inadequate in ensuring fast food restaurant worker health, safety, and welfare, the Legislature concludes that sectorwide minimum health, safety, and employment standards, including standards concerning wages and other working conditions, identified by an expert body with subject matter expertise and experience in the fast food sector and which can represent the demographic diversity of the state’s fast food restaurant operators and employees, are necessary to protect, maintain, and ensure the health, safety, and welfare of, and to supply the necessary cost of proper living to, fast food restaurant employees.

So, AB 257 creates a super-agency (without discontinuing any of the ineffective agencies) and claims it will do the job none of the other numerous agencies have succeeded in doing. Seems this endeavor could only be accomplished either by amazing efficiency, for which government agencies are not well known, or tyrannical power over the fast food industry, approaching a takeover.

Interesting background of AB 257

AB 257 was originally authored by then Assemblymember Lorena Gonzalez, who resigned from office in January 2022 to take the position of chief officer of the California Labor Federation. Ms. Gonzalez is also the author of Assembly Bill 5, signed into law September 2019, which reclassified numerous California workers from independent contractors to employees.

AB 5 caused enormous upheaval, like upending supply chains by curbing the work of hundreds of independent truckers. AB 5 has also spawned numerous high-profile lawsuits, the most prominent of which are those initiated by ride-sharing company Uber, the California Trucking Association, and the International Franchise Association.

It would not be unreasonable to expect the same upheaval from AB 257, given the bill’s unusually broad powers.

After Assemblymember Lorena Gonzalez’s resignation from office, Assemblymember Chris Holden reintroduced the bill in January 2022.

There is a better way

Government micromanagement of industries, promising “living wages” and a plethora of “benefits” might seem to low-wage workers like a dream come true.

Unfortunately, they do not realize that life will find a way. The marketplace is a living thing that survives the harshest conditions – ask any underground entrepreneur thriving in the world’s tyrannies. Another quote is “money goes to where it is treated best.” Ask the many major companies that have left California for more business-friendly states. The cure promised by AB 257 might be worse than the ailments.

Another way to view low-wage workers, like those in the fast food industry, is that there are too many of them. Although sometimes denied by today’s progressives, supply and demand do determine prices. If companies see too many people with non-marketable skills (like graduates of California’s low-rated school system or graduates from Stanford with degrees in philosophy) then companies can pay their workers low wages without fear of exhausting the worker supply.

A more sustainable way to guarantee worker respect, good wages, and benefits is to encourage workers to obtain marketable skills. Never-ending battles with the realities of the market only serve to grow government power, increase taxation necessary to maintain bureaucracies, and divert resources from helping the populace obtain good skills.