When quick meals eating places throughout California have to start out paying employees $20 per hour on April 1, one main chain might be exempted from the mandate—and it simply so occurs to have a connection to a longtime pal and donor to Gov. Gavin Newsom.
Panera Bread is poised to get a lift from a weird clause within the fast-food minimal wage legislation that exempts “chains that bake bread and promote it as a standalone merchandise,” Bloomberg reports, including that “Newsom pushed for that break, in line with individuals conversant in the matter.”
That exemption stands to profit Greg Flynn, proprietor and CEO of the Flynn Restaurant Group, a conglomerate that operates more than 2,300 restaurants nationally and is the second-largest Panera franchisee on the planet, in line with the company’s website. Flynn and Newsom go approach again: Bloomberg reports that the 2 attended the identical highschool on the identical time—Flynn was pupil physique president throughout Newsom’s freshman 12 months—and the restauranteur has donated to Newsom’s gubernatorial campaigns and bragged to colleagues about his shut relationship with the governor.
That relationship doubtless explains the bizarre carve-out that will exempt bakeries from the brand new minimal wage legislation, regardless that nobody concerned is keen to confess as a lot.
Requested instantly concerning the bakery exemption at a press conference last year, Newsom mentioned it was “a part of the sausage making” of the legislative course of. “We went backwards and forwards, and it was a part of the negotiation,” he added.
Bloomberg‘s reporting suggests it was one thing Newsom sought in these negotiations: The bakery carve-out “was adopted as a method of successful the governor’s assist for the laws, mentioned an individual with data of the discussions. The rationale was the governor’s longstanding relationship with a Panera franchisee, the individual mentioned.”
Newsom signed the Quick Meals Accountability and Requirements Restoration Act (FAST Act) in September 2023. The legislation consists of the $20 per hour minimal wage and a variety of other regulations that may apply to restaurant chains with greater than 60 areas nationally.
As a result of labor prices account for a big chunk of the overhead at any quick meals restaurant, the brand new legislation is predicted to have a number of repercussions. McDonald’s and Chipotle have already announced plans to lift menu costs. Supply drivers for Pizza Hut have been laid off. Extra automation is more likely to happen.
Flynn additionally operates Applebee’s, Taco Bell, Arby’s, Wendy’s, Pizza Hut, and Planet Health franchisees throughout 44 states, in line with his company’s website—however his solely California-based institutions are a number of Applebee’s (which aren’t topic to the brand new legislation since it’s not outlined as a quick meals restaurant) and 24 Panera cafes.
It is honest to query how a lot the carve-out for Panera will even matter. In an atmosphere the place different fast-food eating places competing with Panera for labor are required to pay $20 per hour, Panera will doubtless have to supply comparable wages so as to appeal to and retain employees. (One may also marvel if McDonald’s and Burger King will all of a sudden get into the bakery business.)
In different phrases, the actual story right here is not {that a} profitable businessman was in a position to get a particular exemption written into legislation. And, certainly, it is laborious guilty Flynn for looking for what’s in his companies’ finest curiosity right here—he’d previously warned state lawmakers that passing the FAST Act would “successfully kill the franchise enterprise mannequin within the state” and put 728,000 jobs in danger.
The true scandal is that Newsom was apparently keen to push for this particular exemption that advantages his private pal whereas throwing different California companies (and shoppers) beneath the bus.
The deeper lesson is that giving the federal government extra energy to set wages (or regulate different features of the financial system) creates the circumstances for precisely this type of factor to occur. It might be {that a} rich particular curiosity used his connections to the governor to safe particular remedy, or {that a} governor tried to assist out his pal. Both approach, it could not have occurred with out the federal government injecting itself into the connection between employees and employers.
And the extra the federal government does that, the extra alternatives there might be for officers to reward their buddies and punish their enemies. That is not honest, nor ought to or not it’s fascinating. Panera—or any enterprise—should not survive or fail in California due to its connections within the halls of energy.
