McDonald's president who made $7.4 million last year says proposal to pay fast-food workers $22 an hour is 'costly and job-destroying'

• The FAST Recovery Act could raise minimum wage for California fast food workers to $22 an hour.
• A coalition led by chains like McDonald's have secured a referendum vote in November 2024.

The president of McDonald's USA threw shade at California lawmakers for passing a fast-food law that he said would make it "all but impossible to run small business restaurants" in the state, Joe Erlinger said in a January 25 open letter.

AB 257, dubbed the FAST Act, signed into law last year, could raise hourly restaurant wages to $22 an hour in the state. The open letter was published after the state approved a referendum backed by fast-food chains that would put the law up for a vote in November 2024. The law was previously set to be enforced on January 1. But until the vote, state officials can't implement the law.

A majority of McDonald's nearly 14,000 restaurants in the US are run by franchisees, with hundreds of stores operating in California. The open letter was titled, "California keeps looking for ways to raise prices, drive away more businesses and destroy growth through bad policy and bad politics."

In the letter, Erlanger noted that the company wasn't against increasing the minimum wage. "Let me be clear: we support legislation that leads to meaningful improvements in our communities, including responsible increases to the minimum wage. Our business does well when our employees and our communities do well," he said.

"Whether you're a lawmaker, a business owner or leader, or an everyday voter, one thing is clear: California has become a dramatic case study of putting bad politics over good policy," Erlinger said. According to financial disclosures, Erlinger made about $7.4 million in salary, stock options, and other compensation from McDonald's in 2021, the latest year complete compensation history is available.

A coalition of restaurant industry organizations led by McDonald's, Chipotle, and In-N-Out supported the referendum.

Restaurant analyst John Gordon, a consultant for many McDonald's franchisees, said he's not surprised by Erlinger's remarks, which seem to be setting the stage for a battle leading up to the November 2024 vote, he said. 2024 is a presidential election year, and turnout is expected to be high.

McDonald's taking a public stance on anti-business legislation, he said.

Supporters of the union-backed FAST Act, signed by Governor Gavin Newsom on Labor Day, say the law would improve working conditions for thousands of fast-food workers in the state.

AB 257 creates a 10-member council of fast food workers, franchisees, franchisors, advocates for fast food employees, and representatives from the governor's office. The council will establish minimum standards on wages, working hours, and other working conditions related to the health and safety of workers. The law applies to food chains with more than 100 locations, including Starbucks, Wendy's, Burger King, and McDonald's.

The industry's trade organization, National Restaurant Association, said the law would hurt small business owners, including fast food franchisees who own one or two restaurants. The organization said higher wage mandates could raise costs for California fast-food restaurants by $3 billion.

Another main sticking point for the restaurant industry – state officials, including Newsom, would appoint members of the 10-person council.

"The state is teaching us a powerful lesson about what our future could look like if this one-sided style of democracy is mimicked elsewhere or goes unchecked in the Golden State," said Erlinger, a native of California. "There are big, important issues that need the attention of lawmakers. Implementing costly and job-destroying legislation like AB257 is not the answer."

Mary Kay Henry, president of the Service Employees International Union, said chains like McDonald's, Chipotle, and Starbucks, who backed the referendum, "think they can buy their way out of anything."

Fast-food workers across California said they plan to strike Thursday and Friday to protest chain support of the referendum to overturn the FAST Act.

"California voters are about to teach them an expensive lesson: no corporation is more powerful than half a million workers joining together to demand a seat at the table," Henry said in response to the referendum. "As California fast-food workers defend this landmark law and assert their voice, SEIU is absolutely committed to standing with them in their fight."

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