Abstract
To better understand economists’ views of the potential impacts of adopting California’s Fast Food Accountability and Standards Recovery Act (AB 257) on the fast-food restaurant industry, a survey of U.S. economists was conducted in August 2022.
Conducted by Dr. Lloyd Corder of CorCom, Inc., Carnegie Mellon and the University of Pittsburgh, the online survey was sent to a list of 658 economists. The survey was completed by 67 U.S. economists, for a response rate of 10%. Responding economists specialized primarily in labor (69%), and identified their political affiliation as Independent (56%), Democrat (18%), Republican (16%) or Other (10%).
Key findings include:
A strong majority of economists (83%) oppose the adoption of the FAST Recovery Act (somewhat, 12%; strongly 71%).
- The majority think the FAST Recovery Act will have a negative impact on fast-food restaurants: The cost of operating a franchise will increase (93%).
- Fewer restaurant chains will be willing to operate in California and other states with similar laws (84%).
- Prices will be raised for consumers as business owners pass on higher costs created by council mandates (84%). The law would undermine the current franchise business model by creating joint legal liability for independently-owned franchisees and the franchisor (75%).
- Franchisees will close restaurants (73%).
- The law would lead to additional legal liability for small business owners (63%).
Most (84%) agree that the law’s proposed 13-member state council—and up to 82 local-level councils—that sets wage and labor standards would have a negative impact on the fast-food restaurant industry’s growth in California (negative, 32%; very negative, 52%).
Nine-in-ten (89%) think there will be price inflation if the law’s 13-member council sets wage and labor standards for fast-food restaurants (moderate, 60%; significant, 29%).
Eighty-seven percent think the impact on growth and hiring will be negative (negative, 39%; very negative, 48%).
Most (87%) think if similar laws were adopted in other states or nationally, it would have a negative impact on the total number of jobs in the fast-food restaurant industry (negative, 48%; very negative, 39%).
