Flipping burgers — and living on California’s streets

From Jeanne Kuang of CalMatters’ California Divide team:

Low wages and unpredictable hours make fast food the industry with the highest percentage of homeless workers in the state, according to a new union-sponsored report that is sure to stoke debate this year amid the latest contentious legislation over the industry’s labor practices. 

The report released Tuesday — conducted by the think tank Economic Roundtable in Los Angeles and using five years of Census surveys — estimates that of homeless individuals in California who work or have worked in the past year, nearly 11% were employed in fast food. 

Fast food workers made up 6% of the state’s overall homeless population, according to the study. Researchers pointed to both low wages and precarious hours: On average, “frontline” fast food workers — cooks, food preppers, dishwashers, cashiers and counter service workers — were only employed about 26 hours a week. That’s compared to an average of 35 hours across all other industries, the state’s definition of full-time employment.

The report concludes better pay in the industry could have prevented more than 10,000 people from becoming homeless in California since 2014, amounting to a fifth of the state’s jump in homelessness.

Daniel Flaming, president of the Economic Roundtable and one of the report’s authors, noted the industry grew during the pandemic.

• Flaming: “The solutions are not to diminish the industry, but to make it viable and that includes processes for setting equitable, sustainable wages across the board, predictable and viable scheduling and accountability from the industry.”

Business groups called the report “bogus” and pointed out the authors’ acknowledgement that its estimates of homeless fast food workers may be too high. Due to limitations in Census data, the report likely includes some full-service restaurant workers, as well as those who made as little as $400 and thus were likely unemployed, the authors wrote in a footnote.

• Jeff Hanscom, International Franchise Association vice president of state and local government relations: “This report is not a scientific study, but an advocacy piece with zero credibility because the numbers were manipulated. It was paid for by the Service Employees International Union to reach a predictable conclusion: unionization of fast food workers.”

One response Service Employees International Union is pushing this year is a bill to make fast food franchisor companies — the McDonald’s and Burger Kings of the world — jointly responsible for wages and working conditions of their franchisees, the smaller businesses that actually run the restaurants and employ the workers. 

The state has extended this “joint liability” in other low-wage industries in its effort to combat wage theft, but doing so for fast food franchises would be unprecedented in U.S. labor law and is hotly contested by the corporations and franchisees, who say such a move would upend a model that has allowed many small or minority business owners to get their start. 

Last week, the businesses got a boost from their own report arguing they’re being unfairly targeted. An analysis of California workers’ wage claims by the Employment Policies Institute, a think tank in Washington partially funded by the restaurant industry, showed fewer than 1% of worker claims of wage theft were filed against a franchised fast food restaurant.

• Michael Saltzman, EPI executive director: “The numbers are clear: Quick-service restaurants, and franchisee-owned restaurants in particular, represent a fraction of total wage claims.”

The labor bill has passed two Assembly committees, but its provisions were among the more controversial stripped out of last year’s legislation creating a state council to regulate fast food wages and working conditions — a law on hold because the industry qualified a November 2024 referendum.

In another move to boost lower- and middle-income Californians, CalMatters’ health reporter Kristen Hwang explains how the Legislature and Gov. Gavin Newsom are at odds over a controversial 2019 tax penalty they agreed to pass. 

Known as the individual mandate, the tax penalizes Californians who don’t have health insurance. Though Democratic lawmakers balked at the idea of penalizing the state’s poorest residents, the Legislature ultimately approved the tax on the governor’s “verbal assurances” that the money would go towards lowering costs for Covered California enrollees.

But that’s not quite what happened. Though more than $1 billion has been collected since its enactment, only about $355 million was used, in 2020, to lower costs for patients. Newsom says a state law doesn’t require the funds to be used on health care, and plans to temporarily move $333.4 million of the penalty money to the general fund.

Calling it a “rip-off” of funds, Senate Democrats propose to instead use the money to get rid of deductibles and copays for 900,000 Covered California enrollees next year.

CalMatters covers the Capitol: CalMatters has guides to keep track of your lawmakers, explore its record diversity, make your voice heard and understand how state government works. We also have Spanish-language versions for the Legislature’s demographics and the state government explainer.  

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1 On the EV assembly line

In recent months, the California Air Resources Board has made two landmark decisions: Last week, it voted to ban the sale of new diesel big rigs by 2036 and in late August, it moved to ban the sale of gas-powered cars by 2035.

To see how these moves are affecting the car industry, CalMatters’ environmental policy reporter Nadia Lopez visited Ford’s Rouge Electric Vehicle Center in Dearborn, Mich., and witnessed how workers assemble the company’s F-150 electric truck.

“Amid the clank and clatter of the factory floor,” Nadia describes, “self-moving robotic vehicles transport the 1,600-pound batteries that power Ford’s flagship electric pickup truck to workers in various stations, who rush to bolt them to other parts.”

California is a powerhouse in the nation’s auto market: One out of every 10 cars in the U.S. is sold in the state, and at least 17 other states are expected to follow its lead on banning gas-powered vehicles. To meet the state’s goals, however, automakers will have to sell almost 12 million electric cars in California by 2035. Ford plans to make at least 150,000 electric F-150s a year by the end of the year — four times what the company initially planned. 

To do this, Ford had to revamp its assembly lines and retrain its workforce. But during this rapid transformation, unions have fears about workplace safety and job security. Ford’s gas-powered F-150 is assembled by 4,400 workers, but the electric version only requires 750.

Putting up new assembly plants to meet California’s timeline isn’t the only concern for car companies. They also face supply chain constraints, competition for raw materials and the challenge to produce cheaper, American-made batteries.

• Darren Palmer, Ford’s vice president of electric vehicle programs: ​​”Demand for electric cars is rising even faster than ever before. It’s changed the way we work, it’s changed everything.”

Electric vehicle primer: New from our engagement team — a version of our electric vehicle explainer especially made for libraries and community groups, as part of the CalMatters for Learning initiative. Topics already featured: Wage theft, water and state government.

2 College kids making ends meet

From CalMatters’ community college reporter Adam Echelman:

Nearly 20% of California community college students experienced homelessness in the previous year, according to a survey by the Hope Center published in 2019. And across all California higher education systems, an estimated 35% are considered housing or food insecure, a 2019 study found.

But some students say the state’s solutions have come up short. 

Since the reports, Assemblymember Kevin McCarty, a Sacramento Democrat, said at a subcommittee hearing on Tuesday that the Legislature has invested nearly $175 million annually to support expenses such as food, books, transportation and housing across the state’s public colleges and universities. 

At the 10 University of California campuses and 22 California State University campuses, those dollars have helped create food pantries, prevented homelessness through emergency programs, and provided students with assistance signing up for federal benefits. 

• Trent Murphy, a student at CSU Stanislaus, to legislators: “Studies have shown that these programs directly increase retention and graduation rates as well as their sense of belonging on their campus.”

To keep up with inflation and the cost of living, he urged the subcommittee to increase those funds. Students from the University of California and the community college system echoed their support for more funding for basic needs.

All 116 California community college campuses offer some form of assistance with basic needs, said Rebecca Ruan-O’Shaughnessy, a vice chancellor at the Chancellor’s Office. But a third of the campuses did not comply with a 2021 law that required them to establish a place on-campus where students can access those services easily by July 1, 2022. Ruan-O’Shaughnessy said every campus should have a basic needs center by this summer.

McCarty asked higher education administrators to look at other ways to consolidate or improve the way they deliver services, noting that more money for food, housing, and other basic needs at colleges won’t happen, at least this year, with a projected deficit of at least $22.5 billion: “That’s just the reality check of this year’s state budget.”

Speaking of struggles in California higher education, tens of thousands of undocumented college students have difficulty seeking financial aid. As Carmen González of CalMatters’ College Journalism Network writes, of the nearly 45,000 undocumented students who applied for financial aid during the past academic year, fewer than 30% ultimately enrolled in school and received aid.

Students and advocates say that these students lack accurate information or find the process intimidating. Some campuses require income tax forms and information about household size to verify eligibility, sparking students’ fears over deportation. School counselors propose that strengthening campus Dream Centers — named after the 2011 Dream Act that allowed undocumented students to apply for financial aid — could help students navigate the application process and its difficulties.

Also, Assemblymember Mike Fong, a Democrat from Los Angeles, is authoring a bill that would require undocumented students to fill out only one application for both their financial aid and residency.

Have a question about California higher education? Fill out this form and it could be addressed in a future “Ask CJN.” We now have a Spanish version of the form.

3 No, CA banking crisis isn’t over

After state regulators took over First Republic Bank on Monday, I asked in Tuesday’s newsletter whether the worst of California’s banking crisis is over. So far, signs point to “outlook not so good.”

Despite First Republic’s sale to JP Morgan Chase, stocks for several smaller regional banks fell dramatically on Tuesday, including Los Angeles-based PacWest BankCorp, which plunged by 28%, triggering a temporary stop in trading. Its recent struggles are unfolding similarly to Silicon Valley Bank and First Republic before their collapses. Many of PacWest’s accounts hold more than the $250,000 protected by federal insurance, and in March, PacWest lost 20% of its deposits.

Meanwhile, the ripple effects from First Republic’s failure are already being felt. Based in San Francisco, the bank was “the most active lender” for multifamily housing in the Bay Area, according to The San Francisco Standard. Five affordable housing projects also had loans with First Republic. 

And now that JP Morgan Chase is taking over, former First Republic customers and real estate firms fear they’ll lose the personalized service and local industry knowledge of their former hometown bank.  

State Sen. Monique Limón, a Santa Barbara Democrat who is chairperson of the Senate committee on banking and financial institutions, told CalMatters that while she acknowledges the benefits locally-managed banks have “in terms of relating to understanding our communities,” she prioritizes “well-managed banks” above all, whether they are local or out-of-state.

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