Gavin Newsom’s carveout for wealthy donor Greg Flynn is being hailed as the governor’s “biggest blunder since French LaundryGate.” While the scandal shakes out, some key economic lessons should not escape attention.

This episode is fallout from Assembly Bill 1228, the Fast Food Accountability and Standards Recovery Act (FAST Act) signed by Gov. Newsom last September. The bill mandates a $20-per-hour minimum wage for fast food establishments, with a key exception. One section of the bill mirrors the business model of Panera Bread, and establishments that bake bread would be exempt from the $20 minimum wage.

Greg Flynn, by some accounts a billionaire, owns 24 Panera outlets in California, along with Applebee’s, Taco Bell and so forth. As it turns out, Flynn went to the same high school as Newsom, and his company purchased the Carneros Inn from Newsom’s PlumpJack company. Flynn has made political contributions to Newsom including $100,000 to fight the 2021 recall and $64,000 to his reelection campaign in 2022.

Flynn denies he knew Newsom in high school and claims he never met personally with the governor over the minimum wage bill—although he did meet with Newson’s staff. In similar style, Gov. Newsom denies making an exception for one of his wealthy donors. Californians best not believe anything until it’s been officially denied, but it’s not just about Newsom and Flynn.

Carving out an exemption for anybody concedes that business owners dislike government mandates to hike their employees’ wages, in this case from $15.50 to $20 per hour. Where politicians acquired the wisdom to make this mandate is not entirely clear. The merits of minimum-wage laws have long been a matter of debate, and it’s clear that they have unintended consequences.

Government-mandated wage hikes drive up prices, and that keeps customers away. Fast-food workers, generally at the bottom of the economic ladder, may soon be looking for another job. As longtime California commentator Dan Walters explains, Gavin Newsom is anything but working class.

Gavin Newsom’s grandfather was a crony of Gov. Edmund G. “Pat” Brown, and his father a crony of Brown’s son Jerry, who as governor appointed William Newsom to judgeships in Placer County and the state Court of Appeal. The Newsoms also have a connection to the families of Nancy Pelosi and oil tycoon J. Paul Getty, once one of the richest people in the world, and father of Gordon Getty.

After leaving the bench, William Newsom became administrator of the Gordon Getty trust. As Walters notes, that “provided seed money for the PlumpJack chain of restaurants and wine shops,” managed by Gavin Newson.

As Californians may recall, while locking down the state in draconian style regime, Gov. Newsom wined and dined maskless at the upscale French Laundry. Newsom hasn’t been spotted eating bread at Panera, which says it will pay the $20 minimum wage. That is hardly the only issue in play.

The FAST Act establishes a new “Fast Food Council,” to set minimum health, safety and employment standards, beyond those that already exist. Chair of the council is Nicholas Hardeman, chief of staff to Sen. Toni Atkins, a special assistant to former State Assembly Speaker John Pérez, and chief of staff to former State Assembly Speaker Fiona Ma.

Embattled Californians get the favor of a new bureaucracy, run by a government insider. Newsom’s favor to Flynn aside, the FAST Act is ruling class disdain for workers, taxpayers and economic freedom in general.