Misplaced outrage over Panera

In a rare showing of Sacramento bipartisanship, Republicans and Democrats this week were at odds with Gov. Gavin Newsom.

A report in Bloomberg alleged that a bakery exemption in the state’s forthcoming $20 fastfood wage was inserted to help one of the governor’s campaign donors, a franchisee of Panera Bread. (In separate statements, the governor and the franchisee denied the allegation.)

Republicans responded by calling for investigations; Democrats expressed irritation at a storyline that detracted from their policy victory. The social media response was characteristically heated.

But the outrage on the right and the left is misplaced. If anyone deserves blame for the current PR crisis, it’s the labor union that forced California restaurants to reason with this unreasonable mandate.

The story of how California came to embrace a $20 fast food minimum wage is well-known. A multi-year battle between the Service Employees International Union (SEIU) and the restaurant industry, regarding a proposed fast-food regulatory body, ended this past year in a truce.

Both sides gave ground: The union’s fast food council was substantially weakened, but it was spared the indignity of fighting for its signature policy via a voter referendum. Fastfood chains were spared the worst of the union’s schemes to crush small businesses, but had to accept a $20 minimum wage.

That wage mandate, among the highest in the country, was itself the subject of considerable negotiation. Up for debate: Which types of restaurants would qualify as fast food? How many locations qualify a company as a chain? Should the definition cover other types of foodservice companies?

The end result, like the mandate itself, wasn’t pretty. But both sides could live with it.

Living with it was easier said than done. As the Wall Street Journal and others have reported, the consequences of the $20 minimum wage have already appeared. Restaurants are raising prices, slashing employees’ hours, and cutting staff, even prior to the new mandate’s effective date.

Even businesses that are technically exempted from the law are impacted: A $20 starting wage at competitors forces everyone to adapt and increase pay rates.

Labor unions, meanwhile, are now seeking their own exemptions to the law: Hotel union Unite Here has endorsed AB 610, legislation to carve out certain unionized sectors from the new mandate. The union is apparently worried that the law will impact its own value proposition to members.

In this messy environment of bad process and even-worse policy, the currently-controversial bakery exemption seems much less so.

The Newsom story caught fire because of a past donor relationship. But in Sacramento, a single donor is small potatoes. Labor unions and trial lawyers in California spend untold millions every election cycle to place their hand-selected legislators in Sacramento. These politicians then champion harmful laws like union-controlled regulatory bodies, onerous mandates, or the Private Attorneys General Act (PAGA), all of which benefit narrow special interests at the expense of employees and entrepreneurs.

If you want to be outraged about something, be outraged about the status quo that has turned California into a oneparty state. Be outraged about a state that often treats small business owners as a burden rather than a benefit. And be outraged at a legislature enacting policies that are so harmful, businesses sometimes need carve-outs to survive them.

But, like a good bread dough, let the outrage over the bakery exemption rest.