California Wants Higher Standards for Security Guards. What Would It Take? | David Chandler

With the rise in crime, especially after the pandemic, the role of security guards in California is much bigger. Now some lawmakers are saying security guards are not getting paid enough and they are not trained adequately. That's why they're introducing a new law, which has got the security industry worried. Today we bring you multiple perspectives on this proposed legislation. I'm concerned about this because I think it's going to kill this industry. If the rates go up, and again, we're not against giving people a decent pay, but we have to get it from a client. If the client doesn't want to pay, we lose clients. It's that simple. There's a lot of turnover happening in the industry. These jobs are stressful, they're difficult, they're risky, and workers are not getting compensated for the risk. When you see this kind of aggressive regulation on an industry-by-industry-by-industry basis, ultimately that just completely undermines the ability for the economy to innovate and change and move on and invent new things. I'm Siamak. Welcome to California Insider. David, it's great to have you on. Welcome. Well, thank you for inviting me. We want to talk to you about a law that's passing in your industry, the security space, that could impact professionals in your space. Can you tell us more about this law? It's SB 1203, which is initiated by a senator in California that has a lot to do with training. It's really in three components. Training is one of them. Then there's a component about the IWC, which is the Industrial Wage Commission. Then there's another component about basically not allowing security companies to train people at work. Training is a big part of it, and that's what bothers the industry the most. Let me explain to you why. The security industry in California is regulated by the Bureau of Security and Investigative Services. There are approximately 3,000 security companies in the state of California with approximately 360,000 licensed guards. It gives you the idea of what's in. California Peace Officer Standards and Training, the organization that oversees law enforcement, there's approximately 70,000 police officers in the state of California. California has the most stringent training anywhere in the United States, anywhere. We have to have eight hours of powers to arrest an appropriate use of force before you can apply to receive a guard card. You have to get fingerprinted, a California DOJ and an FBI fingerprint background check, and then approve that you have no problems in your background. Then the Bureau will allow you to have a guard card. That's the state. Once you get a guard card, you have 30 days to complete 16 hours of training. Eight of the 16 hours of training have to be in a mandatory module. There are four mandatory modules. Only two of the modules have to be done up front. It's either public relations, observation, documentation, communications and its significance, and liability and legal aspects. Then you have the final six-month total time to complete another 16 hours of training. In reality, a guard card is really a 40-hour training program over a six-month time period. Most people have to do a class either with a potential employer or they could do it at a training facility in California. Then you get your guard card. Once you get your guard card, then you can get employment or you can be offered a job prior to getting your guard card, but you actually can't work as a guard until after you have your guard card. Then you do the training, which we have zero problems with. Nobody has a problem with it. The guard companies train their own guards. If you want to be a security guard, you come to the security company, let's say company ABC. I'd like to be a security guard. Great. We're having a class on Friday. Could you be here at eight o'clock in the morning to take our powers to arrest and appropriate force class? You do. You come in. You get the class, eight hours of in-person instruction. You get to go get your fingerprints done, and then you wait for your guard card to come in the approved by the bureau online, or you can wait for it to come in the mail. Usually takes between three and five days, could take up to a couple of weeks, depending on what's in your background. And then we can put you to work. Okay. We've got a great place for you to work. There's a construction site down the street. Could you show up there day shift eight to five? Just allow the trucks in there. I'll meet you down there tomorrow morning. We'll get you uniforms and we'll teach how to do the job. Sounds simple. You get down there, you start doing the job. Okay. Next week, can you be at the office at eight o'clock in the morning for part of your 16 hours of training for this month? Or sometime in the first 30 days, you have to do 16 hours. It's available online. You can take an online course if you want to. The employer can provide it for you, or you can also go to a certified training facility in California authorized by the bureau. And then you start working. Every calendar year, based on the expiration date of your guard card, you have to do eight hours of continual education to make sure you're up to speed on what's happening in California. Appropriate use of force has to be two hours of that eight hours. Again, nobody has a problem with this. The current bill wants to add eight hours of de-escalation, which there's a program inside the appropriate use of force section of the powers to arrest and appropriate use of force that talks about de-escalation, which is great. Could we use more? Absolutely. Could we ever have enough? Hard to say. Could you really ever have enough of anything, right? They want to add eight hours of de-escalation, which to be honest with you, nobody has a problem with that again. They also want to add more training at the end of the year. So you're adding eight hours up front and then eight hours at the end. That's really 16 hours of training. Again, nobody's really complaining about the training, which is beneficial for the guard too. It's beneficial for the company and for the guard, but training comes at a cost. Somebody has to be paid to do the training, right? You have to either get an instructor, pay an instructor to do it, or in California, you have to pay the guard to take the training while he's taking training, which is another issue. If he takes it online, he can do it at his speed, which that works out really well. The current bill wants you to take all courses live in person with an instructor in the room. That's going to make it difficult for us. Say we have a job at a refinery. There are certain laws and rules federally that have to do with fuels and stuff. How can I train you in a classroom to do all these, handle all these safety issues, potential arson, potential fires, potential theft? How about we just go to the property while you're there and we can train you on the property? Let's walk around. Let me show you the doors over here. Let me show you the entrances and exits. Let me show you the gates. Do you learn better in sitting in a classroom or would you learn better in real life? My professional opinion, real life works a lot better, but you can also do online training just to subsequent the live training or onsite training that you can get. They want to remove all that and put everybody into a classroom. Not sure that's going to work out great for everybody. In the current bill, it says no licensee can do the training. Now we're looking at companies that haven't even been formed yet. We don't even know if they have the ability to, have they been trained in de-escalation tactics? We're the security industry where the owners of security companies understand this business. That's why we chose to be in it. We're the professionals. We're the experts. They want us to turn over people to somebody who we don't know to do the training. You could put your name in the hat and say, I want to do de-escalation training. So when I have to send a guard to you, you teach him de-escalation for eight hours, then he comes back to me. If he doesn't perform the functions of de-escalation the way he was taught, are you going to be liable for that? Probably not. So it's going to come back on me as a company owner. I'm going to have to take the liability. I don't know what you taught him. I don't know if he really did the training for eight hours. I don't know if he just billed me for the training and you just gave him a certificate and he spent a half an hour at your business, but I have to cover the insurance for him. Today, companies are allowed to do training. This bill says no licensee shall do the training. So we're giving it to unknown third parties and we're going to have to accept the liability. We've tried having talks with the author and the author's office because it's tough to get to the author sometimes. And we've had talks with SEIU, which is who's behind the bill with the Senator. And we've had talks with them and I've explained this whole thing to them. And I don't know whether they just don't get it or they just don't care. I'm not sure what it really is, to be honest with you. What about the de-escalation part of this? Is this a speculation or is there any problems there? That's why they want to do training on it. Is there evidence? Two years ago, they started keeping track. The security industry passed a law that said any use of physical force with a member of the public from a security officer has to be reported to the Bureau within seven days. So the Bureau has been taking reports in from what's happening in California. If the companies are reporting them, I'm hoping they are. So I know the Bureau has some statistics, but it's varied. This bill would also want in that instant report the security guard to put in a race and gender of the individual that he had a contact with. Could you see the potential problems of misgenderizing somebody or mis... putting them in a different race category without talking to them? And is that offensive? Could that turn into civil lawsuits for our industry or for me as an owner if a guard misgenderizes somebody? That's a problem for us too. I mean, we're all for doing what's right. And we believe in doing what's right. We're here to protect specific people and specific property. That's the fundamental difference between a security officer and a peace officer. Peace officers are paid to protect all people and all property. But ours is based on the client. Somebody has to pay us to be there. Otherwise, we were not there. When you start talking about adding training, which again, we're not against, it has to be done right. And it has to be done by the industry. Let us do it. Mandate that we have to do training, we'll do it. But it has to come at a price. We're going to have to raise our rates what we charge the client. If you're a client of ours and you hired a security guard, say you hired my company to provide a security officer for you. And I'm going to tell you, okay, I'm going to charge you $30 an hour. I'm going to pay the guard $20 an hour. I have to pay insurance, workers comp. I've got to give them more than one uniform to wear at your business because you want them looking good every day, right? And what other tools do you want him to have? Do you want him to have pepper spray? Do you want him to have a baton? Do you want him to have handcuffs? Do you want him making arrests or not making arrests? Do you want him to have a firearm or other non-lethal weapon like maybe a taser? All those things come with a price. And maybe $30 is too high for you. You say, look, I can squeeze out $25. Some companies will have room in there to make deals with you. Some companies won't. Well, I'll try to talk to you and sell up our business by telling you, what do you expect us to do? Tell us what your expectations are. And I'll tell you what we're going to do for you at for what price. And maybe we can come to an agreement on that. Do you think it's the fast food law that has caused this? Let's talk about the industrial wage commission, which is what this law, what this bill wants to do is open up the industrial wage commission, which is what they did similarly in the fast food industry. They wanted to raise the rates for the employees of fast food, which is phenomenal. Who doesn't want to raise rates? Who doesn't want more money? I do. I want more money, but you have to be responsible about it, right? The IWC hasn't been opened since 2004, except for two weeks when they passed the law about the fast food industry. Then it closed again. So they're talking about opening it up again to see what the industrial wage commission is going to say. What should the rates be for security guards? If you're happy with a rate that you're paying for your security guard at $25 or $30 an hour, and some commission who we don't know who they are, because they have to be appointed by the governor. They say, we think security should be up at least $25 or $30 an hour. Your rate's going to go up. Is that okay for you? Without any comments or opinions on it? Or are you going to say that rate is fine, I'll pay you more money, which is coming out of your bottom line. That's going to hurt. Small increments is understandable, but a big hit is going to be tough for anybody. There's also another component of this thought that will impact the wages, right? Minimum wage in California, I believe is $16.90, depending on where you are in California. If you live in San Francisco, the pay rate is higher because the living wage is higher in San Francisco. Los Angeles, Silicon Valley, same problems. The industrial wage commission can do it statewide, or they can do it regionally, or they can do it by county. We don't know. We don't know what the plan is. They don't know what the plan is, because the industrial wage commission isn't grouped together right now either. So they're going to have to reconstitute it, open it up again, and that can open the door for tremendous increase. They could say, we want $10 an hour more than minimum wage, which would be devastating. This is absolutely a job killer bill, because if you're not willing as a client to pay the extra money for the security company, I can't provide you a guard. So you're going to look at other things to do. You're going to look at AI. You're going to look at cameras. Maybe just lock the door and put an intercom system out front. You don't need a physical person there. You can have somebody in a booth, maybe in state or out of state, watching your cameras. I don't know. But watching cameras, there's nothing wrong with cameras. I think cameras help with security also, but not to take over a human person. Not to take over somebody that can hear something, can recognize the sound, can see something, can alert other people. You can't take away from the human element. AI is great. And believe me, I am not against AI. I'm learning AI. I don't understand a lot about it. But could it replace a human? I hope not yet. So based on your experience, if this bill goes through, what could happen to your industry? The Bureau of Security and Investigative Services gets their money, which is part of the Department of Consumer Affairs. The Bureau of Security and Investigative Services gets their money through the security industry. They get no money from the general fund. They also regulate private investigators. They regulate alarm companies. They regulate repossessors, repo men, women. They also regulate the locksmith industry. If this bill goes through as it is, our industry is going to see a phenomenal jump in pricing for guard cards. Today, we're at $60 to get a guard card, to apply to get a guard card so you can work as a security officer, right? It's $60 today. The Bureau has told me if this law gets passed as it is, it's going to be a $10 million hit to the Bureau. And where are they going to get the money from? Because of all the costs. Right now, this bill would ask the Bureau to do a market analysis to see if there's enough training facilities in California to do this bill, to do the escalation training and other training they want. The Bureau's got to come up with the curriculum, how to do it, certified trainers to do it. This is not going to be an overnight bill, which they want this bill to be overnight. In the bill, they say, the author said that she said this will be implemented in 2028, which just happens to work out 10 days before the Olympics. So could you imagine in 10 days or two weeks, let's give them 14 days, you can train 360,000 guards in de-escalation before the Olympics hit Los Angeles? That's going to be tough. If this bill goes through, will all the guards have to do this training from scratch? Even the ones that already have, they're in business right now, they're doing the operations. It could be one day training up front in the first 30 days. And then they may or may not implement the second part. We don't know. So what's going to happen is they're either going to fail completely. The bill could be pushed off. It could be implemented before the Olympics. I don't know. They implemented this legislation prior to FIFA, which scared everybody to death because FIFA needed a lot of security also. And you can't just bring in security guards from other states because they don't follow our laws, rules, and regulations. So we have to follow what the bureau has here. And $10 million hit is going raise that guard card from $60 to clearly over $250, $300 for a guard card. How is that going to impact the general public wanting to be a security officer if they have to pay that fee themselves? They can barely pay $60 themselves. What about the people in the security space? With the fast food law, there was different arguments. Some people said that fast food is not really a courier for people. And when you get minimum wage jobs in fast food, you're not going stay there for all of your career. So it's fine for people to be there. But then there was another argument that said that a lot of people are stuck in fast food and they're not making enough money. What do you think about the security space? Is this also a stepping stone to go get better jobs in the future or other different jobs in the future? Or people stay in the security space? It could be. And 20, 30 years ago, I would have told you it's just a stepping stone. But as I've been immersed in security over the last, I hate to say, 30, 40 years, it's changed. You can have a career in security without a problem. Are you going to work your whole time as a guard? You could if you wanted to. Or you could step up the chain as you go, get into administration, get into supervision, get into administration, get into managing. I mean, and I know people that have worked for security for years and years and years, some of the same company. The security industry, to be honest with you, is not really a brawn job. You don't have to be all muscles and six foot five and 280 pounds. Security job is more of a brain job. And what I mean by that is you're taught prevention is number one, observe and report is number two. Call the police for help. You don't have to take on anybody. You certainly don't have to arrest anybody if you don't want to. It's not required by law to arrest anybody. You're just a citizen who's paid by another citizen to protect their specific people and their specific property. Could it be a career? Absolutely. Could McDonald's be a career? McDonald's has changed over the years too. Do you think it's because of the fast food law that things have changed? I absolutely think the fast food industry changed in my perspective. I travel a lot for my job, so I unfortunately have to stop at fast food in order to eat. So I don't have the luxury of waiting until I get somewhere. I'm eating on the road. So fast food is important to me. It's taken more time to get the food I wanted. It's not always correct. If I make a special order at the counter or if I make a special order in the machine, I get what I get now. And that's just the way it is. Do you think this could happen to your industry? Is that why you're concerned about this law? I'm concerned about this because I think it's going to kill this industry. And what I mean by that is if the rates go up, and again, we're not against giving people a decent pay, but we have to get it from a client. If the client doesn't want to pay, we lose clients. It's that simple. Then what do we do? We look for clients that are willing to pay us. Those are fewer when the price goes up. If you like to go to McDonald's, I'll use McDonald's. If you like to get a hamburger and you like big hamburgers, they're getting smaller. They're smaller than they were when you were a kid. Everything's gotten smaller. You get candy. I remember going to a supermarket when I was a kid and getting a Hershey bar, and it was 10 or 20 cents. You can't get a Hershey bar to save your life for 20 cents. It's going to cost you $1 to $2 for a Hershey bar, and they've gotten smaller in size. It affects everything. This industry, again, we're paid to protect specific people and specific property, and we like doing it. We enjoy what we do. We provide a service, but we can't do it if the price goes above and beyond what clients are willing to pay. Because at the end of the day, I tell other private patrol operators, it's okay to make a profit. This is a pennies business for us. It's not a multi-billion industry like the author is saying. It may be a multi-billion dollar industry, but out of that multi-billion dollars, we're paying people. We're paying humans to do a job. We're trying to get people off of welfare and off of unemployment. Here's a job. Go out and do it. Does it pay minimum wage? Some does. Some doesn't. The way I see it is the cost for all of the security companies will go up in California if the minimum wage goes up. Do you think the customers will not want to pay if the cost goes up for everybody because everybody's cost is going to be higher now? Hard to say. I believe if the cost goes up statewide across the board, we're going to lose a lot of customers because they can't afford it. Their margins are small also, my understanding. Different industries have different things. The cost is going to go up for the state of California, without a doubt. Have you ever walked into a hospital and not seen a guard? Have you ever walked into an airport and not seen a guard somewhere? Have you ever walked into a bank and not seen a guard? All these costs are going to go up. Courthouses, there's guards everywhere. There are guards in more places than you've ever thought about. They're human beings, and they're being concierges. They should say good morning, good afternoon, good evening to you, and is there anything I can do to help you? That's what I tell guards in California. You have to be sociable. Talk to people. Let me ask you a question. If you had a guard in your building or in this building here, would you expect your guard, if somebody hurt themselves, would you expect them to go over and minister first aid to them? You would, probably. So now you've hired a paramedic, right? If there was a fire in your building, would you expect the security guard to get the fire extinguisher and attempt to put it out? Now you've hired a firefighter. Somebody walks in and says, excuse me, is there a good Italian restaurant here? Would you expect them to give them advice as directional and say, yes, down the street there's a good Italian place? So you've hired one person to do three other jobs. Would you expect that from a cashier? Would you expect that from a box boy or a bus boy at a restaurant? You're expecting a lot from a security guard, yet you're only willing to pay a little amount of money. There are some companies that pay more and therefore we pay the guards more. There are some guards in California that are making extremely good money. The executive protection industry, those guards in some of those positions are making over 160, 220,000 a year. That's good money. They started out as a security officer for probably minimum wage, possibly came from the military, came from law enforcement or going into law enforcement. It could be a stepping stone for going into law enforcement too, between 18 and 21 years of age. The intention of this law is to help security guards make more money. And ideally on paper, it should not impact you guys as security companies, you should be charging more and pay people more. You know, it sounds good. Actually, it sounds great. I'd love to pay people more. But again, if you look at me as owning a security company and you want me to pay $2 an hour more or $3 an hour more or $10 an hour more, how do I do that without getting it from the client? We're the middleman. The client is the one paying us to provide security services for them. And then we broker a security officer to come up, hey, you work for us, go to this site, you're going to work that site. We're the middleman. So it sounds good. And who doesn't want more money? Everybody does. But somebody has to pay it. I can't afford as a security company to give anybody a raise outside of what I'm getting from the client because that's how we do our contracts. We build it in. We build in training costs. We build in overtime, anticipated overtime. We build it into contracts so we can, as a security company, we can make money too. Not a tremendous amount. As I told you, this is a pennies business. But we have to convince our clients that this is worth the money. And again, we don't know what it's going to be. Could be $2 an hour, could be $5 an hour, could be $10 an hour. I honestly don't know. And nobody knows because the Industrial Wage Commission hasn't been reopened again to find out what their thoughts are on this. So we don't know what it's going to be. But anything I come to you for or I come to a client for and I want more money, it's going to hurt no matter what. Because we take money off of your bottom line. We're non-revenue producing. Next, we go to a Berkeley professor who has looked into the pay of the security staff and their training. The security workforce in California, and we're talking about unarmed private security guards in California. What we find is that almost half of them are what we call low-wage workers, where they get paid less than two-thirds of the area median wage that other workers get paid. And many of them, almost 80% of them, are getting paid much lower than a wage they need to be self-sufficient and provide for their families, what we call the living wage. And this is a workforce that is essential to public safety. They are the first respondents in many cases because they are on-site. And the responsibilities of the job have gotten more complex and riskier, especially since the pandemic. There's a new law that's getting proposed that is mandating training for the security staff and also at the same time is trying to create a council to look at the wages of this industry. Are you aware of this, Tom? What do you think of it? Yeah, I'm aware of the law. There is no national training standard for security guards. It's up to each state to come up with the training standards. And a lot of the training standards currently are about number of hours of training. California does have one of the highest number of hours required. But the issue is that the training that they're receiving based on hours is not adequate for the job. So a lot of the training that they get is essentially watching a video and then answering some multiple choice questions after the video. And that is not enough to train these workers, for example, to de-escalate some situation where there's a mental health crisis that a customer is going through or some other kind of face-to-face conflict public safety issue. The training currently doesn't meet the demands of the job for these workers. So you think they need more training? It makes sense to have more training? It's not just more training, but it's improving the training that they get so that they can deal with the large array of situations that they are encountering today on the job. One of the complaints that we heard from the industry on this was that it's not very clear where and how this training will get implemented and who does the training. I think having a system that ensures that the training is consistent, robust, and adequate throughout the whole industry makes sense from a policy perspective. The other thing is the bill is also trying to just raise labor standards for the whole industry. You know, what we call sectoral labor standards for the whole sector of security guards. And that also has been done in other industries with very good results. Because when you have an industry like security guards where there's a lot of contracted work, so they're not employees of the businesses they're protecting, but they're working for another company that's hired by that business, it's really hard to standardize some of these labor standards and improve them one company at a time. Whereas if you can take care of the whole sector at once, it's a much efficient way and better for the public, especially in a public safety industry like security guards. So on average, people are making two-thirds of the median income in security space? So the way that we define a low-wage worker is somebody who gets paid less than two-thirds of the median wage in that area. Obviously, even in California, the area median wage is different depending on what part of California you're looking at. So in the San Francisco Bay Area, you would expect a higher area median wage. And security guards in the Bay Area make more than security guards in other parts of California, but it's also a more expensive place to live. And so even though they're making a bit more than other security guards in California, they're still struggling to make ends meet and to be self-sufficient and provide for their families. One of the complaints that the industry have about kind of creating a body to raise the minimum wage for them, it might impact the industry and they might have to automate a lot. So what are your thoughts on that? Do you have any thoughts on that? Yeah. So I'm a labor economist by training. And so the lens that I would use is a lens that's been used by David Autor, who's a professor of economics at Harvard, who's done a lot of studies on technology and labor and how they interact. And one thing that is clear from his research and others who have done similar research is that technology doesn't completely replace the job. It replaces certain tasks of the job, but not the job. And so you can implement technology here like cameras or drones or even robots to monitor and do surveillance of buildings and so forth, but they're not going to be able to take care of the person to person issues that occur on the job for security guards. The mental health challenges we're talking about, the escalating dangerous situations, that's not something that technology is going to be able to do. And what we see is that when technology comes in, it makes those areas where you need that extra training and skill even more important. So I think that using more technology in this industry only implies that you need more and better training for the security guards that remain because they're going to have to focus on those person to person conflicts that technology cannot take care of. Based on what you've studied, people should get compensated more in your opinion, your thoughts. And is the security space, does it work like sometimes in certain industries people come in and they move up. They come in at minimum wage or lower wage and then they end up moving up. Does that happen in this space? So let me answer the first part. One of the biggest problems in the industry today is the high turnover. So one of the things we document in our study is that the security guard industry has a turnover rate in the 90% compared to most other private sector industries that have a much lower turnover of around maybe 60% of the most. So there's a lot of turnover happening in the industry. And the reason for that is because these jobs are stressful. They're difficult because they're risky and workers are not getting compensated for the risk. And so in a public safety industry like this, you want experienced, trained people protecting the public. And if you're constantly having to replace workers, you're not getting the most experienced workers and you're not getting the most trained workers on any given situation. And so the research is very clear that when wages go up and labor standards in general go up, turnover goes down. And that is good not just for workers, but it's good for the businesses that hire them and it's good for the public. And so that's where we think that raising wages is a necessary condition for this industry. And training is also another necessary condition for this industry. And one thing that it's important to mention is that training and wages go together. So they're not substitutes for each other. So if you have more training with really poor wages, you're still going to have turnover in the industry and there's still a public safety issue there. And if you raise wages but do not improve training, you're still going to have high turnover in this industry and public safety issues for the public. So they have to go together. Do you have any thoughts on who is the best fit to do this type of training? Not on who's the best fit, but what the research does show, and this is research looking at other public safety industries like nursing and police, is that face-to-face, hands-on training is more effective than passive training like videos and those kinds of delivery methods. So I don't know who should provide the training, but the training needs to improve in the way it's being done today, where it should be face-to-face, hands-on active training instead of passive training. Is there anything else that you want to comment on that we didn't cover? The only thing I would mention is that the security guard workforce in California is primarily works of color. Hispanics are, so it's male Hispanics. And one thing that was surprising to us is that one in 10 security guards are 65 years and up, which for the demands of the job, that was surprising to us. And one-fifth of workers are 55 and up. So there's a lot of security guards who are older, and that was surprising to us given the demands of the job. It's interesting to know that senior, at that age, people are involved in security, which is a tough demanding on the body, right? It is, yeah. And then if you're worried about your own safety because you don't feel like you're trained enough, and if you're worried about making ends meet because you're not getting paid enough, that just adds to the stress of this very stressful job already. The security industry is concerned about potential wage increases and setting minimum wages, kind of like the fast food law. And that could lead to some unemployment. So we sit down with Christopher Thornburg, who's an economist who has actually studied the fast food law in California and its impacts. We want to talk to you about the fast food law, and we want to find out, you've done some studies on this. How did it impact the industry? Did it cause people to lose their jobs, or it helped them get more pay? Well, a little bit of both, as the case may be. I do appreciate that many of the union-backed labor centers in the state continue to insist that the FAST Act, which of course raised the minimum wage for corporate franchises to $20 an hour minimum, clearly had some impact on employment. We've seen about the overall employment of fast food in the state to contract by about 3% since that rule went into place. So not a huge amount, but I think we need to be realistic that while minimum wages aren't a terribly effective policy, at the same time, they're also not the end of the world. Sometimes both sides of the fence claim very dramatic results. One side said, this is perfectly harmless, no one ever got touched. And the other side will tell you that every single fast food restaurant's closed. The answer is they raised their prices some, they invest in some labor-saving technology, and the new equilibrium is a slightly smaller workforce base, a slightly more expensive menu, and we're at this kind of new equilibrium. Some people argue that there was automation, and now we're seeing automation everywhere we go. What are your thoughts on that? Well, that's happening anyway. One of the things about the FAST Act that we all have to keep in the back of our minds is yes, it's pretty amazing that they raised the minimum wage for these corporate fast food restaurants at $20 an hour. The overall minimum wage in the state of California is currently $16.50 an hour. So that is also a very high number, and you see many sectors of the economy, even those fast food restaurants that may not be subject to the FAST Act because it's a true individual restaurant, even they're grappling with these high labor costs. And yeah, you have to figure out ways of getting about their business without having as much in the way of labor. I'm sure we've all walked into McDonald's in the last few years and noticed now they have a giant touchscreen there to take your order as opposed to having somebody actually at the counter helping you out. Again, this is one of the things that these retail chains do in order to try and save labor costs. One of the things to keep in mind is the other reason we haven't seen the FAST Act do more damage is because the FAST Act has been largely constrained from a regulatory standpoint, largely because well over a year ago, the chairman of the board stepped down and our governor has yet to replace that board chair. And as a result of that, the board can't increase wages or put new controls on the industry. One thing to keep in mind here about this FAST Act is it creates this board and that board can always get together and make it even tougher on these individual restaurants. Remember the $20 an hour was an opening shot. They have every intention of pushing it farther and farther. We are not out of the woods on this particular situation yet. And is there a number that you think if we pass that for wage increase that could have a significant impact? No, because that's not how markets work, right? I mean, everybody wants to say there's a cliff edge or there's a wall or you can't go any farther than this, but economies don't work this way. The more we make labor costs go up, the higher food costs are never really going to be. And the industry overall will shrink as a result and overall smaller consumer base. So that'll be the back and forth. Look, Californians already pay some of the highest cost of food in our nation right now. We know it has a lot to do with these labor laws. And my assumption is this going to be that much worse when this board gets back up and running again. If this happens to, let's say, for the security industry, if there is a minimum wage set up for security guards, which is higher than the minimum wage, do you think it will have impacts in the security space? Oh, absolutely it will. Again, you keep raising wages above that kind of market equilibrium rate and you're going to see a more expensive industry hiring fewer people. We see it over and over. But of course, it's not just here. Remember, a few years ago, they passed a $25 minimum wage for health care. By the way, the governor keeps delaying that because of the fact that there are people already struggling with labor costs. But again, he leaves, the new governor comes in, that starts getting enacted as well. But there's a broader pattern here, which I think everybody needs to pay attention to. Look, a few years ago, we had an $18 an hour minimum wage on the ballot. It got shot down. There have been conversations about a higher minimum wage running through the legislative bodies. It hasn't gone anywhere. The standard rank and file voter in California is over this stuff. They want the state to be focusing on what they think are higher priorities, like fixing our power system, fixing our roads, closing the budget, stop worrying about this stuff. You've done enough. And as a result of that, the left has kind of given up on pushing more of these big minimum wage increases. Instead, now they're going for industry by industry by industry, which everybody should be really worried about. Because look, you may think it's just fast food or security today, but trust me, they're going to come for you next. It's just a function of time. And when you see this kind of aggressive regulation on an industry by industry by industry basis, by a labor market by labor market basis, well, this really does carry you into that centrally planned socialist kind of economy, where you just use rules for every single little corner of the economy. And ultimately, that just completely undermines the ability for the economy to innovate and change and move on and invent new things. This is exactly not where the state needs to be going right now. We should be focused on building enough housing, as opposed to running around pretending we're fixing something with these ridiculous labor laws. Now, Chris, people that are in these industries that might have benefited from their wages going up, and some other people that are looking at that, and they might think this is good. How do you counter that? You're just moving the poker chips around the table, right? Because look, if you raise the fast food wage, $20 an hour or more than that, well, that's going to end up showing up in the cost of food. And of course, a lot of low and middle income families eat fast food. That's what they do once in a while, right? So you're benefiting a small group of workers on the basis of taking away from a lot of lower and middle income households. You're not changing broader social dynamics. You're just taking from these people and giving to those people. And in the end, when you ask who really suffers from these rules, it's kids. The unemployment rate for people 20 and under in this state is the highest in the nation. And that is because of our high minimum wage. You're taking away their job opportunities. The unemployment rate for people who are disabled is one of the highest here in California compared to the rest of the nation. Again, these are people who don't get the benefit of the doubt when you're paying $20 or $22 an hour starting pay. So you end up hurting some people, helping other people, and you don't really move the needle. Look, if you want to help that person who's working in the checkout line at McDonald's, you're not going to help them by making their pay go up a dollar or two or three. How you're going to help them is to make sure that they have the training and the career path to not be stuck at a checkout line. These are called entry-level jobs for a reason. You're supposed to take them when you're an entry-level worker and then move on to bigger, better things inside the economy. This is not solving the problem. And ultimately, that for me is the most frustrating thing of all. Look, I appreciate we want to help lower-income families. This isn't the way to do it. Chris Thornberg, economist. It was great to have you on California Insider. Pleasure to be here. Tell us what you think about this discussion and who do you agree with. Make sure to leave us a comment or email us at siamak.californiasider.com. We read all of your emails and comments. I'm