More than 1,000 delivery drivers in California will lose their jobs next month after two major Pizza Hut franchisees decided to eliminate their stores’ delivery service following the passage of a state bill raising the minimum wage to $20 an hour.
The law will go into effect in April.
The layoffs will affect 1,200 workers of restaurants in Orange, Los Angeles, Riverside, San Bernardino, and Ventura counties. They’ll also impact more than 800 workers at Pizza Hut locations in Sacramento, Central California, Southern Oregon, and the Reno-Tahoe area, according to media reports.
The suspension of Pizza Hut stores’ delivery means customers will have to rely on third-party apps like DoorDash, GrubHub, and Uber Eats for food deliveries.
The law known as Assembly Bill 1228 was introduced by Assemblyman Chris Holden, D-Pasadena, and signed into law by Gov. Gavin Newsom in September, KGO-TV reported.
The law requires fast food chains with 60 or more locations nationwide to pay their employees the higher minimum wage, and restaurants say they will raise prices to offset the higher labor costs.
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Rachel Greszler, senior research fellow at The Heritage Foundation, noted in her commentary published by the Freemont Tribune, “When lawmakers attempt to ‘help’ lower-wage workers by mandating higher minimum wages, they often end up causing more harm than good. As the late economist and commentator Walter Williams warned about minimum wage laws, ‘intentions have no effect on outcomes.”
“California lawmakers may think that mandating higher wages could help address issues like housing unaffordability, high crime rates, homelessness, and rising costs, but the evidence shows it could have the opposite effect,” Greszler explained.
“That’s because laws can’t create higher incomes; they only can redistribute incomes. The only way workers can achieve lasting real wage gains is by becoming more productive,” she wrote.
Greszler also suggested states should do away with unnecessary and costly licensing requirements. She called on federal lawmakers to end registered apprenticeships, so that more people can get paid during their training, and to remove unnecessary regulations on businesses. The estimated $12,800 in government regulatory costs could go toward workers’ higher wages.
“Such policy changes may not poll as well as a $20 minimum wage, but they’ll actually help workers. And isn’t that the goal?” she asked.