Tag Archives: Pizza Hut

A Very Predictable Reaction To The New Law

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On Monday, The Wall Street Journal reported that California fast food restaurants are beginning to lay off workers in anticipation of the new minimum wage that will take place April 1.

The article reports:

A California state law is set to raise fast-food workers’ wages in April to $20 an hour. Some restaurants there are already laying off staff and reducing hours for workers as they try to cut costs.

California restaurants, particularly pizza joints, have outlined plans to cut hundreds of jobs in the months leading up to the April 1 wage mandate, according to state records. Other operators said they have halted hiring or are scaling back workers’ hours. 

Michael Ojeda, a Pizza Hut driver for eight years in Ontario, Calif., received notice in December that his last day would be in February, according to a letter from his former employer. Pizza Hut franchisee Southern California Pizza offered $400 in severance if he stayed through February, but Ojeda, who said he made hundreds of dollars a week in wages and tips as a delivery driver, went on unemployment instead. 

“Pizza Hut was my career for nearly a decade and with little to no notice it was taken away,” said Ojeda, 29, who previously supported his mother and partner on his Pizza Hut delivery wages. 

Southern California Pizza didn’t respond to requests for comment. Pizza Hut said it was aware of some of its California franchisees changing their delivery services. 

The article concludes:

Alexander Johnson, a second-generation owner of 10 California Auntie Anne’s and Cinnabon restaurants, said the higher wages would lift his labor costs by around $470,000 annually. He has reduced his staff by about 10, and his 73-year-old parents have returned to working in the business to help shave costs. 

Johnson said he turned down a recent offer to add a location in a waterfront tourist area in San Francisco because of the projected operating costs. 

“It pains me to think about shutting down stores or laying people off,” said Johnson, who moved to Nevada this year to open Scooter’s Coffee locations in the state. “I love California, and I’m very sad about what’s going on.”

This new law will also have a negative impact on people entering the workforce for the first time. Unemployment will increase under the new law, and it will be more difficult to find an entry-level job. Companies are not in the habit of training inexperienced workers at the rate of $20 an hour. I wonder how long this law will stay in place.

If You Wanted Your Pizza Delivered…

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Beginning in 2024, California’s new minimum wage law passed by the Democrat legislature will go into effect. The new law sets the fast-food minimum wage at $20 an hour. That’s a pretty good place to start if you are a worker. However, what does it do to the bottom line of a company who is in business to make a profit (most companies are in business to make a profit)?

On Thursday, Issues & Insights posted an article detailing the impact the law, which will go into effect in April, has already had.

The article reports:

The state will raise its overall mandated minimum-wage rate from $16 an hour to $16.50 an hour overall, starting in 2024. But some industries will get an even bigger wage shock: fast-food minimum wages go up to $20 an hour starting in April. Meanwhile, workers in the health care industry will see their minimum wage rise to $18, $21 or $23 an hour, depending on the job.

It’s about time, you say?

Let’s start by saying we’re not against anyone getting a raise. But raises should come from the companies themselves, not from government decrees. As study after study in recent years show, government-mandated minimum wage hikes usually hurt those they’re meant to help.

It’s an irony that seems lost on California’s leftist political class, now in total control of the state, continues to “help” those at the bottom rungs of the economic ladder by making it more expensive for businesses to hire them and keep them working.

Already, with California’s looming minimum-wage tax on fast-food chains in the state, employers are tweaking costs by reducing hours, laying off workers and charging you more for that cheeseburger, fries and a drink that you crave.

Though the calendar says it’s still 2023, franchisees of the Pizza Hut chain have announced this week they’re laying off 1,200 drivers who used to deliver their piping-hot pies door-to-door. With the new higher wages, they can’t afford to keep drivers working.

The article points out some other consequences:

So who will suffer?

“Every time we raise the minimum wage, kids lose their jobs,” Ohanian explains. “This isn’t efficient, and it isn’t right. We should not be implementing policies that prevent people from being able to work.”

As for the argument that the hike is needed to “keep up with inflation,” whose inflation are we talking about? Just the workers? How about the businesses? With three-quarters of their costs being labor-related, they have to take immediate action, or go out of business.

And then there are the customers. They, not the businesses, will foot the bill when they buy a suddenly-much-pricier cheeseburger or a pizza. Prices will go up, as they inevitably do, when higher costs can’t be offset by gains in productivity.

For the curious, there are literally dozens of studies and reports out there (including our own) that explode the myths of raising minimum wages, ranging from Walter B. Williams’ 1977 landmark study for Congress that showed minority youths suffered most when minimum wages rise, to more recent studies showing that non-wage losses after a minimum-wage hike offset any gains for workers.

What will now happen, no doubt, is that there will be more automation (robots already prepare food at McDonald’s, Chipotle, White Castle, Panera and other outlets), more self-service terminals, and fewer workers overall.

And, oh yes, stores will close. Marginal stores that can’t make up the higher costs will simply shut down, thanks to inflation and higher wages.

Sometimes when the government aims to help, it simply makes things worse for the people who are struggling to make ends meet already.

 

 

Losing Perspective

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The American Thinker posted an article today with the following headline:

Parents of slain Pizza Hut robber angry that victim used a gun against him

Wow.  I am sorry that Michael Grace Jr., son of Temia Hairston and Michael Grace Sr., was shot during an attempted robbery. But the fact remains that he was shot while committing a crime and possibly endangering someone else’s life.

The article reports:

Hairston and Grace Sr. acknowledged that their son was breaking the law by robbing the business, and said they definitely don’t condone what he did.

“It was an act of desperation, but I do not believe that Michael would have hurt anyone,” said Hairston.

That may be true, but the employee had no way of knowing that Michael would not have hurt anyone, and since Michael was committing a robbery, the employee might have been justifiably concerned for his own safety.

Losing a son is a horrible thing for a parent to go through, but getting angry because he was killed committing a crime does not really make sense. It might make more sense to find a way to help in the community in such a way that fewer children think it is okay to commit crimes.