California fast food workers now earn $20 per hour. Franchisees are responding by cutting hours.

[Metaphorical]

2. Weeding out barely surviving businesses

There are two ways of looking at stories such as this one. The media usually picks this up as:

1. Look at how terrible government regulation is, that businesses are having to cut back or shut down because the cost of labor is now so high.

or

2. If a business is dependent upon paying it's workers less than a living wage, then perhaps it shouldn't be in business in the first place.

Franchises have long been, to me, a truly exploitive business practice. Franchise owners end up paying a huge amount in licensing fees, specific (usually franchisor supplied) equipment, and so forth, then has to pay labor costs on top of that. The franchisor, on the other hand, bears almost none of the actual costs, keeps the operations mostly off their own books, doesn't have to pay for labor, yet still gets the marketing benefits of having the brand. Workers for the franchisees have no career mobility, have lousy benefits, and all too often are undocumented immigrants who have little recourse to legal representation.

I have to suspect that as demographic trends continue towards smaller (or no) families, franchises will be the canaries in the coal mine of businesses to go under because they are truly not viable without labor that will soon not be there..