Leviathan Is on the Menu

I put for the general inclination of all mankind, a perpetual and restless desire of power after power, that ceaseth only in death.
—Thomas Hobbes, The Leviathan

California continues to attack businesses and entrepreneurial freedom. Leviathan has awakened, this time with Assembly Bill 257, promoting a state-controlled trade union for all restaurant workers.

Current United States secretary of labor Marty Walsh has left and become head of the National Hockey League’s players union, perhaps to help in the league’s diversity, equity, and inclusion and pride initiatives. Joe Biden has nominated Julie Su as Walsh’s replacement, appointed by Biden as deputy labor secretary in 2021. She received Senate subcommittee approval on April 27 and will go to the floor for a full vote, and opposition is expected.

Su left her position as head of California’s Labor Standards Enforcement to be Governor Gavin Newsom’s secretary of labor in 2019. She promoted the gig-worker legislation for companies like Uber and Lyft. The law, Assembly Bill 5 (AB 5), broadened the definition of a worker, creating medical, overtime, benefits, and wages requirements for transportation network companies. The bill was rejected in a special referendum titled Proposition 22 in late 2020.

The seven hundred thousand members of the Service Employees International Union appealed this AB 5 referendum result, challenging the legitimacy of the special ballot. The California Supreme Court dismissed their claim this year. AB 5 is dead, but the dream of state power lives on.

If Su is confirmed for this federal post, she will enthusiastically support the current California Assembly bill, cooked up to “protect” restaurant and related workers.

AB 257, titled the Fast Food Accountability and Standards Recovery (FAST) Act, was passed in August 2022. California’s governor signed the bill and said it would be effective in January 2023.

The coalition Save Local Restaurants organized in opposition, gathering over one million signatures in September to oppose the bill before completion. Save Local Restaurants gained an injunction from the Sacramento Superior Court on January 23. The voters will decide in a counter ballot proposal slated for November 2024.

This process of pass, injunct, prop, and eliminate is not unusual in California government. The recipe is always the same: Identify a free market of labor exchange and find abuses within it. Highlight the abuses found. Expose existing laws as inadequate. Demonstrate at the state capital. Provide a remedy which gives the state power to legislate the same degree of “justice” for all workers. Opposition then injuncts and petitions for a proposition to reform or repeal.

This time the complaints were centered on wage theft in overtime payments. Additional complaints included low wages, part-time schedules, and unpredictable hours. Harvard’s Shift Project in cooperation with the University of California, San Francisco provided the Assembly committee data based on 2,034 voluntary surveys. The sample was 0.12 percent of restaurant workers, which in 2022 numbered 1.7 million.

This bill is not a simple measure. AB 257 uses sectoral bargaining to negotiate across locations with different owners. No workers or craft are excluded. This law codifies what serves as a platform for a statewide union of all franchise food service workers and leverages against sole owners of restaurants their right to hire.

The prix fixe of Leviathan is stunning. A fast food council will be created. Ten members picked by the governor, Assembly speaker, and the Senate Rules Committee will decide how to implement the bill. Fast food standards would be drafted for employment, wages, working conditions, and training. Businesses must supply the necessary cost of proper living wages to fast food restaurant workers.

Cities and counties with more than two hundred thousand citizens will establish local FAST workers committees to create local rules. Local FAST committees will apply these local rules, not the market. These committees are to be led by regional directors. There will be no representation of owners.

The bill makes it clear there will be penalties if workers councils find violations of health, wages, or other standards. There is a clause to include franchisors in future suits for damages. All California locations of franchises that have more than one hundred locations nationwide qualify for FAST oversight.

Employers exempt from FAST oversight will pay FAST wages and benefits to compete for workers. The bill could extend to all, franchised or not, restaurant groups and individual stores. Fifty percent of restaurants are single, unaffiliated stores. All stores will be co-opted to comply by eventual administrative ruling or a de facto labor market.

The Council for Citizens against Government Waste identified the bill as biased against fast food restaurants. Further advocating the impact of this legislation will raise prices and reduce the number of workers. Automation and fewer menu options will likely result from the application of AB 257.

The Center for Economic Forecasting and Development predicted a food price increase of 20 percent. In an act of political thuggery, students and faculty organized to have this report quashed and the project reassigned to a less biased group.

This is law accomplishing the goals of the Fight for $15 movement which began in New York City in 2012. Twenty years ago, fast food franchise workers walked off their jobs in a demonstration for higher wages. Local chapters are in 150 major cities. Organizations like Shift are working to prevent part-time work with flexible hours.

California is the test case to give state-controlled workers the whole table, not just a seat. Kate Andrias at Columbia has called this a significant step forward, creating “a focal point for workers to be a more empowered part of the Administrative system.”

The International Franchise Association gathered restaurant owners groups for a united front. The American Chamber of Commerce joined six other groups from the National LGBT Chamber of Commerce to the Cal Asian Chamber of Commerce to resist and now repeal the law. This broad opponent grouping is due to the 30 percent minority ownership of franchises, 60 percent of franchises being single-owner stores.

The employee’s organization is a sector “union.” Locals will exist in major cities. The state of California legislature and cabinet will hold control of this organization. Elected or appointed officials will decide the leadership of the board, not the workers. Owners will have no place in the administration of the laws. Workers would be de facto members of this trade union. Diagram this and you may see 1930s Italian spices to flavor it. Buona cena.