Union myths drive bad public policy on fast-food industry

By Mike Saltsman.

"Labor unions are entitled to their opinions on public policy, but not their own facts.

In California right now, the Service Employees International Union, or SEIU, is using bogus data and false claims to enhance its efforts to organize restaurant workers. Congress needs to pay attention because what happens in California doesn’t stay there for long.

Last year, Democratic California Gov. Gavin Newsom signed AB 257, an SEIU-backed scheme to create an unelected council of union appointees to regulate workplace standards for fast-food outlets. The union justified its proposal with a report claiming that these businesses were uniquely bad violators of state labor law.

Yet data from the state’s own Department of Industrial Relations debunked this argument. According to an analysis of the data by the Employment Policies Institute (EPI is managed by Berman and Co.), fast-food businesses account for just 1.6% of all reported wage violations, up to five times lower than other industries.

That inconvenient truth didn’t keep the Legislature from passing AB 257, but their constituents may have other ideas: This past fall, over a million California voters signed petitions to halt the law and place it on the ballot as a referendum in 2024.

Instead of listening to the reasonable voices of voters, the SEIU ignored them.

This year, it returned with AB 1228, known as the Fast Food Franchisor Responsibility Act, which would create joint liability between an independent small-business owner (franchisee) who owns a recognizable brand and the company that establishes the brand’s trademark (franchisor).

In simple terms, the bill would force countless small businesses in the state to close their doors while forcing job cuts and higher prices at those that remain open.

In a flashback to last year’s debunked claims, the SEIU implied that franchisees in the fast-food industry are uniquely likely to commit wage violations against their employees. Yet again, the state’s own data rejects this narrative. Statewide records of alleged wage violations show that franchisee-owned fast-food outlets represent just two-thirds of 1% (0.65%) of wage violation claims in the state.

In actual investigations where the state fined employers, fast-food franchises were responsible for an even lower share — just 0.41% of claims statewide.

By using bogus data to promote myths about the state’s fast-food industry, the SEIU and other activists are crippling California’s business environment. The state’s hospitality industry is still reeling from the consequences of the SEIU’s fight for a $15 hourly minimum wage. The union justified the then-radical demand using comforting studies from its allied economists, who argued that a $15 minimum could easily be absorbed by the state’s employers.

According to the Bureau of Labor Statistics, the state’s restaurant employment growth rate dropped by more than two-thirds over the last decade and has struggled to rebound from the pandemic. Despite 16-to-19-year-olds making up the largest share of restaurant employees, Census Bureau data shows California’s teen unemployment rates are already well above the national average.

Studies from Harvard, the University of California, Irvine, and others have shown clear evidence of the job loss and business closing consequences of radical wage laws.

California’s ideas will soon come to Congress. Next month, Sen. Bernie Sanders will hold a vote on a proposed $17 minimum wage, inspired by California and other states that have embraced this mandate. Further attacks on the hospitality industry aren’t far behind. If the union-backed research introduced to support these proposals sounds too good to be true, it probably is."