‘All the restaurants are going to close overnight’: Celebrity chef slams California politician’s $50 minimum wage proposal, calling the state ‘the worst situation’ in the country. Do you agree?

Rep. Barbara Lee, D-Calif., is championing a proposal to raise the federal minimum wage to $50 an hour as part of her bid for the U.S. Senate. Given the substantial gap between this figure and the current federal minimum wage of $7.25, her initiative is attracting considerable attention.

Among the critics is celebrity chef and restaurant owner Andrew Gruel, who expressed serious concerns about the proposal in an interview on Fox Business.

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“This would completely decimate every business in the state of California,” he said, speculating that only a small fraction of high-end retail businesses could support a $50 an hour minimum wage.

Gruel maintains that California is home to thousands of state jobs, challenging the state to lead by example and immediately raise wages for those workers to $50 an hour.

“They can’t afford it,” he said, pointing out the financial impracticality of such a wage increase.

Additionally, Gruel suggested an alternative method to improve workers’ incomes without increasing wages: reducing payroll taxes to increase net take-home pay. However, he noted that this strategy would not be carried out, attributing inaction to the same financial constraints.

Widespread closures or price increases?

Gruel delved into the potential financial turmoil for restaurants, illustrating a scenario in which higher labor costs could plunge establishments into financial distress.

“Asking a restaurant, which in a phenomenal scenario is making 10% on, say, 30% labor costs, to double its labor costs to 60%. “That means they are going to have a net negative 20%,” he explained, concluding that “all restaurants will close overnight.”

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To put things in perspective, California already has one of the highest minimum wages in the country: $16 an hour. Additionally, fast food restaurant workers in the Golden State will have their minimum wage raised to $20 an hour starting April 1, 2024.

Gruel is not the only restaurateur concerned about rising labor costs. Andrew Wiederhorn, president and founder of restaurant operator FAT Brands, recently warned that consumers should prepare for higher costs when dining out when there are increases in the minimum wage.

“Someone has to pay for it and restaurant operators have no margin for it,” Wiederhorn said. “Then prices are going to go up.”

“The worst managed state”

Further expanding his criticism, Gruel condemned California’s administrative efficiency.

“California is the worst run state,” he said bluntly.

Indeed, the Golden State faces challenges. Central to Lee’s advocacy for a $50 minimum wage is the rising cost of living in the state.

During a Senate debate on February 12, he claimed that a United Way report found that a family of four living in the San Francisco Bay Area would need $127,000 a year just to “survive.” (Moneywise found a 2022 United Way Bay Area report that cited a family of four would need $109,088 to meet basic needs.)

For a person working 40 hours a week at $50 an hour, their annual income would be $104,000. To put things in perspective, the median household income in the United States was $74,580 in 2022, according to the Census Bureau.

With files from Moneywise reporter Bethan Moorcraft

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

By Sam