Fast Act's on hold, but Calif. has pushed through another way to raise fast-food wages

Working Lunch: The SEIU was successful in recreating the 1920s-era Industrial Welfare Commission, with the power to set pay within industries with a large portion of low-wage earners.

Proponents of raising fast-food wages in California have hit on a way of altering the pay scale in workers’ favor regardless of what happens when the Fast Act is put to a ballot vote in 2024, according to this week’s Working Lunch government affairs podcast.

Co-hosts Joe Kefauver and Franklin Coley, principals in the Orlando-based lobbying firm Align Public Strategies, explain that California has quietly resurrected a 1920s institution empowered to set the wages and working conditions for specific industries. The newly recreated Industrial Welfare Commission is chartered to begin its wage setting with industries in which at least 10% of the workers are below the poverty level.

That puts the state’s fast-food business squarely in the Commission’s crosshairs, Kefauver and Coley agreed.

“It can achieve similar goals to what the union was hoping to achieve with the Fast Act,” said Coley.

He was referring to the Service Employees International Union, or SEIU, the union that pushed the Fast Act through the state legislature and leaned heavily on Gov. Gavin Newsom to sign into law.

The law creates a 10-seat Fast Food Council to set the wages and working conditions for California fast-food restaurants that are part of a chain with at least 100 stores nationwide. Two of the seats would be held by fast-food workers and two more by union representatives, while another pair is reserved for delegates of fast-food chains and two more go to franchisees.

The restaurant industry spent millions of dollars to collect the signatures needed to have California voters decide via the 2024 election ballot if they want to enforce the law. In the meantime, the law has been suspended.

“The SEIU was caught off-guard by our willingness to go to the ballot and to fund getting it on the ballot,” said Kefauver.

In response, the duo stressed in their podcast, the SEIU pushed for the re-establishment of the Industrial Welfare Commission, an entity that was intended to protect factory workers during the widespread industrialization of the U.S. in the 1920s. Newsom re-started it by allocating $3 million in funding for the Commission earlier this week.

The Commission is charged with beginning its work in January and issuing new wage and workplace rules by November.

“It’s an end run for putting the Fast Act into law without having to fight it out over this two-year intervention,” said Coley, referring to the Act’s suspension until it’s put on the 2024 ballot.

A wage-setting body similar to the Commission was created in New York several decades ago to adjust the wages of fast-food workers located in unusually expensive places to live, like New York City and its suburbs. But nothing else like it has been seen in probably 20 years, according to the Working Lunch episode.

Kefauver speculated that labor advocates likely “rolled in an old guy like me on a cart to pontificate on something that was done back in the Roosevelt era.”

He asserted that tempering the impact of the Commission will be a challenge for California’s fast-food industry, the nation’s largest. The opportunity is to influence who’s named to the panel, and it will be difficult to muster broad public support in that effort. “What percentage of Californians even know what the IWC is?” he asked.

Coley characterized the development as another chapter in the industry’s efforts to counter the SEIU’s push for higher restaurant-worker wages.

“It’s not over,” he said. “There will be wrangling and maneuvering in this fight for the rest of our lifetimes.”

To learn more about the Industrial Welfare Commission, and get an update on other legislative or regulatory issues affect restaurants, download Working Lunch from wherever you get your podcasts.

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