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The astonishing number of fast food jobs lost – and restaurants shut – because of California’s new $20-an-hour minimum wage

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The astonishing number of fast food jobs lost – and restaurants shut – because of California’s new -an-hour minimum wage


Fast food chains in California are slashing jobs – as a way to cut costs after the minimum wage in the state was hiked to $20-an-hour. 

Almost 10,000 positions across chains from Pizza Hut to Burger King have been cut since the law came into effect on April 1, according to a report from a trade group in the state. 

On top of that, chains have been shuttering restaurants – including beloved Mexican chain Rubio’s Coastal Grill, which this week filed for Chapter 11 bankruptcy and closed 48 locations in the state.  

The California Business and Industrial Alliance (CABIA) slammed Governor Gavin Newsom was for pushing the law through, which has also meant businesses in the state have had to raise prices.   

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To highlight the impact of the law, the trade group created out an advert in Thursday’s edition of USA Today with mock ‘obituaries’ of popular brands.

California Governor Gavin Newsom signed the fast-food bill surrounded by workers at the SEIU Local 721 in Los Angeles on September 28, 2023

The tongue-in-cheek advert, titled ‘In Memoriam: Victims of Newsom’s minimum wage’, highlighted the issues faced by smaller brands including Rubio’s, and fast food giants including Pizza Hut, Burger King, Subway and McDonald’s. 

It features news clips documenting the changes made by companies in response to the wage increase.

This includes raising prices, letting go of workers to cut labor costs – and in some cases shutting down locations. 

One says: ‘A McDonald’s franchisee who owns 18 outposts in California is considering reducing store hours, hiking menu prices and delaying renovations to offset the impact of the state’s $20 hourly minimum wage for fast-food workers.’

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Even before the law was made official earlier this year, chains including Pizza Hut and Round Table let go of more than a thousands delivery workers to brace for the financial ramifications of the change. 

The law signed by Newsom in September last year increases fast-food workers’ minimum wages to $20-an-hour at chains with more than 60 locations in the US.

That is 25 percent more than the standard minimum wage of $16-an-hour in California, which itself came into effect in January.

On a national level, Congress has not touched the minimum wage in decades – it is still $7.25-an-hour. Instead, so-called ‘wage wars’ play out on a state level. 

‘California businesses have been under total attack and total assault for years,’ CABIA president and founder Tom Manzo told Fox Business. 

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‘It’s just another law that puts businesses in further jeopardy.’

He said that officials were living in a ‘fantasyland’ if they think drastic wage increases will actually help workers or businesses. 

‘You can only raise prices so much,’ Manzo told the outlet. ‘And you’re seeing it. People are not going to pay $20 for a Big Mac. It’s not going to happen.’ 

To highlight the impact of the law, the trade group took out a fake ad in Thursday's edition of USA Today with mock 'obituaries' of popular brands

To highlight the impact of the law, the trade group took out a fake ad in Thursday’s edition of USA Today with mock ‘obituaries’ of popular brands

Rubio's Coastal Grill announced it would shut 48 restaurants in the state this week (Pictured: The grand opening of the third Rubio's location in the Pacific Beach neighborhood of San Diego, California in 1986)

Rubio’s Coastal Grill announced it would shut 48 restaurants in the state this week (Pictured: The grand opening of the third Rubio’s location in the Pacific Beach neighborhood of San Diego, California in 1986)

Critics warned that businesses would turn to digital ordering kiosks as a way to cut down on wage costs for staff

Critics warned that businesses would turn to digital ordering kiosks as a way to cut down on wage costs for staff

When the Democrat governor signed the law in 2023, Newsom said the state was getting ‘one step closer to fairer wages, safer and healthier working conditions, and better training by giving hardworking fast food workers a stronger voice and seat at the table.’

But Republican critics claimed the wage hike would simply mean workers are replaced with self-checkouts and ‘robot cooks.’ 

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Harsh Ghai, a Burger King franchisee with 140 restaurants on the West Coast announced in April how he planned to have digital kiosks installed in all his locations in two months. 

Until the wage hike, he planned to roll them out over the next five to ten years. 

‘We have kiosks in probably about 25 percent of our restaurants today,’ Ghai told Business Insider at the time.

‘However, the other 75 percent are going to have kiosks in the next probably 30 to 60 days.’



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Deadly snake bites are up in California. Here’s what to do if you see one.

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Deadly snake bites are up in California. Here’s what to do if you see one.


The sunny skies and warmer weather in California are increasing the chance of seeing snakes, and this year, there’s been a big spike in the number of fatal rattlesnake bites in the state.

Rattlesnake deaths are so rare that in most years, there aren’t any in California. But so far this year, two people in southern California have been killed by rattlesnake bites, and a third victim was fatally bitten in Mendocino County.

Now, some snake experts are warning people about getting too close to these creatures.

Michael Starkey, executive director of the nonprofit group Save the Snakes, said the warmer weather is bringing rattlers, gopher snakes, and other native species out of their winter slumber, where they are coming in contact with people.

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“Around the Sacramento area, we can find them along the American River Parkway, El Dorado Hills, anywhere where there’s big patches of open land,” Starkey said. “A snake like a gopher snake, you could find them in some parks in the city of Sacramento.”

Peter Henry has had some close encounters with rattlesnakes while walking along the bike trail in Rancho Cordova. He said they came out a lot earlier than in past years.

“Mid-February is the first time I saw one out on the trail this year,” Henry said.

Other people, like Gary Johnston, who frequent the American River Parkway say snakes are a common sight.

“I’ve actually had one lunge at me,” Johnston said. “It was in some flora, a bush that I couldn’t see. It was coiled up.”

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What should you do if you come across a snake?

“Stopping and giving the snake space is the best thing you can do to make sure everyone is safe, you and the snake,” Starkey said.

Starkey said encounters are growing in places where new homes are being built on top of snake habitat areas. He said they’re an important part of the ecosystem, and he asks people to call a professional snake wrangler instead of killing them if they are found on people’s property.

“It’s just another reminder that we need to practice coexistence with wildlife, give snakes space and be aware when we enjoy nature,” Starkey said. “That’s their home too.”

If you have questions about snakes or want to see some in person, the 5th annual Sacramento Snake Festival is taking place this Saturday, beginning at 10 a.m. at Hagan Community Park in Rancho Cordova.

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California’s Rainy Day Fund and Other Budget Reserves Overview

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California’s Rainy Day Fund and Other Budget Reserves Overview




key takeaway

California’s state budget reserves, including the “rainy day fund” and other reserve accounts, serve as a financial safety net for services like education, health care, and child care during economic downturns. The rules for depositing and withdrawing funds are complex, and policymakers should consider reforms, such as excluding reserve deposits from the Gann Limit spending cap, to strengthen the state budget’s resilience during a recession.

Introduction

California has several state budget reserves. These reserves help to maintain essential public services — like education, health care, and child care — when revenues fall short, such as during recessions. Reserves aren’t for everyday spending, but rather a financial safety net for the state.

This report describes California’s state budget reserves, explains how funds can be accessed and used, and discusses proposals to reshape these reserves that have been floated in recent years. For more information about California’s reserve accounts, see the Budget Center’s companion resources, including this video — California’s State Budget Reserves Explained — and this fact sheet — 5 Key Questions About California’s State Budget Reserves.

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state budget Reserves in a nutshell

Budget Stabilization Account (BSA): California’s Largest Reserve

The BSA is California’s largest state budget reserve. Deposits into and withdrawals from this “rainy day fund” are based on complex rules that were added to the state Constitution by Proposition 2 of 2014. Key rules include the following:

An annual deposit is required. Prop. 2 requires that 1.5% of General Fund revenues be set aside every year. Until 2029-30 half of these revenues must be deposited into the BSA and the other half must be used to pay down certain state debts. Beginning in 2030-31, the entire amount must be deposited into the BSA, although state leaders will have the option of redirecting up to one-half of each year’s deposit to pay down debts.

In some years, the state must set aside additional General Fund revenues. This occurs in years when estimated General Fund revenues that come from personal income taxes on capital gains exceed 8% of total General Fund proceeds of taxes. The share of these “excess” capital gains revenues that is not owed to K-12 schools and community colleges under the state’s Prop. 98 funding guarantee must be used for BSA deposits and debt repayments, following the same requirements as the mandatory 1.5% deposit.  Since Prop. 2 was enacted, capital gains tax revenues have exceeded the 8% threshold in most years, but could fall below the threshold in years when there are downturns in the stock market.

State leaders may also make discretionary deposits. In addition to the mandatory annual deposits required by Prop. 2, policymakers have the option of saving additional, discretionary revenue in the BSA.

The required annual deposit may be reduced or suspended in the event of a “budget emergency. If the governor declares a budget emergency, the state may reduce or suspend the required BSA deposit with a majority vote of each house of the Legislature. Prop. 2 defines a budget emergency as a situation where:

  • Conditions of disaster or extreme peril are present; or
  • The state has insufficient resources to maintain General Fund expenditures at the highest level of spending in the three most recent fiscal years, adjusted for state population growth and the change in the cost of living.

BSA funds may be withdrawn in the event of a budget emergency, but the entire balance cannot be removed at once. If the governor declares a budget emergency and the Legislature agrees with a majority vote of each house, funds may be taken out of the BSA. However, the entire balance cannot be removed immediately. Only the amount needed to address the budget emergency may be withdrawn, subject to the additional limitation that a withdrawal may not exceed 50% of the BSA balance in the first year of a budget emergency. In the second consecutive year of a budget emergency, all of the funds remaining in the BSA may be withdrawn.

Funds that are taken out of the BSA may go toward any purpose determined by the Legislature. For example, these dollars could be used for health care services, subsidized child care for working families, cash assistance for people with low incomes, K-12 schools, and any number of other public services and systems.

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Funds in the BSA cannot exceed 10% of General Fund tax revenues. Prop. 2 caps the balance of the BSA. Once the balance — excluding any discretionary deposits — reaches 10% of General Fund tax revenues, any revenue that would otherwise have been required to go into the reserve must be instead spent on infrastructure, which includes housing. Prior to 2026, the BSA balance reached the cap twice — in 2022-23 and 2023-24 — but then dropped below the cap as state leaders withdrew funds in some years to address budget shortfalls.

Prop. 2 of 2014 also established the PSSSA, the state’s budget reserve for California’s K-12 schools and community colleges. Prop. 2 does not require an annual deposit into this reserve. Moreover, Prop. 2 restricts the circumstances under which transfers to the PSSSA can occur. For a PSSSA deposit to be required, all of the following conditions must be met:

  • General Fund revenues that come from personal income taxes on capital gains are relatively strong;
  • Growth in General Fund revenues leads to relatively strong growth in the state’s annual minimum funding guarantee for K-12 schools and community colleges; and
  • The Legislature does not suspend the annual K-14 education minimum funding guarantee.

Even under these restricted circumstances, Prop. 2 limits the size of the deposit to the schools reserve when such a deposit is required.

Deposits to the PSSSA may be reduced or suspended in the event of a budget emergency under the same rules that govern reductions or suspensions of deposits to the BSA (see the prior section of this report). Similarly, funds may be withdrawn from the schools reserve if the governor declares a budget emergency and the Legislature agrees with a majority vote of each house.

In contrast to the rules governing the withdrawal of funds from the BSA, all of the PSSSA funds may be withdrawn in one year. Moreover, funds withdrawn from the PSSSA must be used to support K-12 schools and community colleges.

Safety Net Reserve: Funds to Protect the Medi-Cal and CalWORKs Programs

The Safety Net Reserve was created in 2018 to set aside funds to help cover the costs of two programs that often see increases in enrollment during recessions: Medi-Cal and California Work Opportunity and Responsibility to Kids (CalWORKs). Both of these programs serve Californians with low incomes — with Medi-Cal delivering health coverage, and CalWORKs providing modest cash assistance to families with children. During economic downturns, more people become unemployed and temporarily rely on these programs to cover their basic needs, increasing state costs.

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The Safety Net Reserve is not a constitutional reserve, so there are no binding requirements governing deposits or withdrawals. This means that funds can be transferred into and withdrawn from the reserve at the discretion of the Legislature. In fact, state policymakers voluntarily deposited $900 million in the Safety Net Reserve before draining all of those funds in 2024 to help address a $55 billion state budget problem.

Moreover, while state law specifies that the funds are to be used only for Medi-Cal and CalWORKs costs during economic downturns, state policymakers could decide to modify this language and use the funds for other purposes. However, in establishing this reserve, policymakers clearly recognized the need to protect critical services for Californians with low incomes from budget cuts — cuts that would undermine Medi-Cal and CalWORKs at the very time that these programs are needed most.

Special Fund for Economic Uncertainties (SFEU): The Discretionary Reserve

The SFEU is the state’s discretionary General Fund budget reserve, meaning policymakers have a great deal of latitude in spending the funds in the reserve. The amount of money in the SFEU is equal to the difference between General Fund resources and General Fund spending in a given fiscal year.

The SFEU acts as a buffer against unanticipated revenue shortfalls or spending increases. Due to California’s constitutional balanced-budget requirement, which requires the state to enact a budget in which spending does not exceed available resources, the projected SFEU balance cannot be less than zero at the time the annual budget is adopted. However, if state revenues come in lower than projected and/or spending unexpectedly rises, the SFEU balance will decline, and may become negative as spending begins to exceed revenues.

The Legislature can appropriate funds from the SFEU at any time and for any purpose. Additionally, in the event of a disaster, the governor can allocate funds from the SFEU without the prior approval of the Legislature. Specifically, when the governor declares a state of emergency, the Department of Finance (DOF) can transfer funds from the SFEU into a subaccount called the Disaster Response-Emergency Operations Account (DREOA). These funds are allocated to state agencies for costs that are “immediate and necessary to deal with an ongoing or emerging crisis.”

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Projected Surplus Temporary Holding Account: A Place to Set Aside Anticipated Surplus Revenues

State leaders created the Projected Surplus Temporary Holding Account in 2024. This account gives policymakers a place to temporarily set aside anticipated surplus revenues, “ensuring that funds are only spent once they are realized.”

State leaders have broad authority to determine whether or how to use this holding account. The only requirement is that revenues that go into the account cannot remain there for longer than one year. If state revenues materialize as projected, the revenues in the account may be spent for any purpose or transferred back to the General Fund for future use.

This holding account is a “pilot budgeting project” that expires at the end of 2030, although state leaders could approve an extension as well as potentially modify the rules.

What’s Next for California’s State Budget Reserves?

The rules that govern California’s budget reserves can be amended by voters or state policymakers. Changing the reserve rules established by Prop. 2 (2014) would require voters to approve a constitutional amendment. Other reserve rules can be changed by state policymakers without the need for voter approval.

In recent years, state policymakers and others have advanced proposals to revise California’s reserve policies, although none have moved beyond the conceptual stage. Common proposals for changing state reserve policies include the following:

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Proposals to increase the share of state General Fund revenue deposited into the Budget Stabilization Account (BSA), or rainy day fund.

Proposals to allow the balance of the BSA to grow beyond 10% of annual state General Fund revenue.

Proposals to exclude reserve deposits from California’s spending cap, or “Gann Limit.”

Changes to the rainy day fund or the Gann Limit would require amending the state Constitution. This means that voters would have the last word on the most significant proposals to modify California’s state budget reserves.

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As e-bike popularity surges in Northern California, safety concerns grow

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As e-bike popularity surges in Northern California, safety concerns grow


An e-bike boom is sweeping across Northern California, with more young riders taking to the streets than ever before.

Inside California Ebikes in Fair Oaks, owner Erica Frith says business has taken off. 

What started as a small operation out of a local gym in 2020 quickly grew into a storefront by 2022, and demand hasn’t slowed.

“We’re getting about 100 out the door a month,” Frith said.

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But for her, it’s not just about sales, it’s about the experience.

“There’s only a few things in life that create a childlike smile and happiness, and bike riding is one of them,” she said.

With more bikes on the road, service demand is also climbing. Shop service manager Jesse Cristo says keeping up means relying on years of hands-on experience.

“You have an e-bike industry that’s fledgling, but it’s a five billion dollar a year industry,” Cristo said.

At a recent safety panel in El Dorado Hills, residents and leaders came together to address concerns about young riders on the road.

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“The safety around this area has been really scary,” said resident Liz Kmiec. “I have witnessed multiple scenes where these kids do not recognize the danger they’ve put themselves in.”

For law enforcement, the focus is on education, especially for parents.

“Education is huge,” said CHP Officer Andrew Brown. “We’ve been getting out to schools, community events, and sharing information to make sure parents know what they’re buying their kids.”

As the e-bike boom continues to grow, leaders say the challenge will be making sure safety keeps up.

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