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The chairman of McDonald’s, which earned $7.4 million last year, said the proposal to pay fast food workers $22 an hour was ‘expensive and job-killing’

McDonald’s management denounces the FAST Act in an open letter.John Greim/LightRocket via Getty Images

  • The FAST Recovery Act could raise the minimum wage for California fast food workers to $22 an hour.

  • A coalition led by chains like McDonald’s won a referendum vote in November 2024.

  • This week, a senior McDonald’s executive criticized lawmakers for passing the law in an open letter.

The president of McDonald’s USA has overshadowed California lawmakers for passing a fast-food law that he says would make it “almost impossible to run small commercial restaurants” in the state, Joe Erlinger said in a statement. open letter of January 25.

AB 257, dubbed the FAST Act, signed into law last year, could raise hourly restaurant wages to $22 an hour in the state. The open letter was released after the state approved a fast-food chain-backed referendum that would put the law to a vote in November 2024. The law was previously set to go into effect Jan. 1. But until the vote, state officials may not enforce the law.

The majority of the approximately 14,000 McDonald’s restaurants in the United States are run by franchisees, with hundreds of stores operating in California. The open letter was titled “California continues to seek ways to raise prices, drive out more companies, and destroy growth through bad politics and bad policy.”

In the letter, Erlanger noted that the company was not against raising the minimum wage. “Let’s be clear: we support legislation that leads to meaningful improvements in our communities, including responsible increases to the minimum wage. Our business does well when our employees and communities do well,” he said.

“Whether you’re a legislator, a business owner or executive, or an everyday voter, one thing is clear: California has become a dramatic textbook case of bad politics trumping good politics,” Erlinger said. According to financial information, Erlinger received approximately $7.4 million in salary, stock options and other compensation from McDonald’s in 2021, the full compensation history for the past year is available.

A coalition of restaurant industry organizations led by McDonald’s, Chipotle and In-N-Out backed the referendum.

Restaurant analyst John Gordon, a consultant for many McDonald’s franchisees, said he was not surprised by Erlinger’s remarks, which appear to be setting the stage for a battle leading up to the November 2024 vote, he said. -he declares. 2024 is a presidential election year and turnout is expected to be high.

McDonald’s is taking a public stance on anti-business legislation, he said.

Supporters of the union-backed FAST Act, signed by Gov. Gavin Newsom on Labor Day, say the law would improve working conditions for thousands of fast-food workers in the state.

AB 257 creates a 10-member council comprised of fast food workers, franchisees, franchisors, fast food employee advocates and representatives from the governor’s office. The council will set minimum standards on wages, working hours and other working conditions related to worker health and safety. The law applies to food chains with more than 100 locations, including Starbucks, Wendy’s, Burger King and McDonald’s.

The industry’s trade organization, the National Restaurant Association, said the law would hurt small business owners, including fast-food franchisees who own one or two restaurants. The organization said higher wage mandates could increase costs for California fast-food restaurants by $3 billion.

Another main sticking point for the restaurant industry – state officials, including Newsom, would appoint the 10-person board members.

“The state is teaching us a powerful lesson about what our future might look like if this one-sided style of democracy is emulated elsewhere or left unchecked in the Golden State,” said Erlinger, a California native. “There are big and important issues that need lawmakers’ attention. Implementing costly, job-destroying legislation like AB257 is not the answer.”

Mary Kay Henry, president of the Service Employees International Union, said chains like McDonald’s, Chipotle and Starbucks, which backed the referendum, “think they can get away with anything.”

Fast food workers across California said they plan to strike Thursday and Friday to protest the chain’s support for the referendum to overturn the FAST Act.

“California voters are about to teach them a costly lesson: No company is more powerful than half a million workers coming together to demand a seat at the table,” Henry said in response to the referendum. “As California fast food workers stand up for this historic law and raise their voices, SEIU is absolutely committed to supporting them in their fight.”

Are you a fast food insider with ideas to share? Do you have any advice? Contact this reporter by email at nluna@insider.com or via the encrypted Signal number 714-875-6218.

Read the original article on Business Insider

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