Beacon Economics Sets the Record Straight on the UCR Business Center Controversy

By Ken Alan, Forensic Business Journalist

A series of articles reported by the Los Angeles Times in February and April stated some University of California faculty members were “Raising the alarm about a research center affiliated with UC Riverside that they say uses corporate funding for reports ‘attacking proposals to improve the lives of working Californians.’”

The articles cite an “Open letter to the UC Regents seeking investigation of UC Riverside — Beacon Economics relationship,” signed by 56 faculty members at UC Riverside, Berkeley and Davis, along with 44 graduate students. Most signatories appear to be humanities studies faculty with credentials in media studies, music, history and political science. The Times failed to question why faculty with more relevant credentials in business, economics and research appear to have only three signatures. 

The story states the letter to UC Regents was circulated by UCR Professor of Media & Cultural Studies Dylan Rodriguez, whose biography can be found here: profiles.ucr.edu/app/home/profile/dylanr.

No questions were raised about how the signatures were gathered at three participating schools and why closer Southern California campuses, such as UCLA or UC Irvine, weren’t included.

None of the articles explain why this petition was sent directly to UC Regents without first going through proper channels at UCR. “If there was some true complaint about the quality of our research, there is a system within UC Riverside to deal with that,” said Dr. Christopher Thornberg, principal at Beacon Economics. “There is an administrative office that handles complaints. And if they really thought that our research was substandard, they could and should have gone through that particular office. They didn’t. They went on this petition campaign. Most of the conversation is about how our answers are morally incorrect. And that’s a really slippery slope.”

The letter to UC Regents and ensuing negative press resulted in the UCR School of Business and Beacon Economics severing their partnership after seven years. “Obviously, the relationship between UC Riverside and Beacon was mutually beneficial. The school got a lot out of it,” said Thornberg. “UC Riverside is a fantastic institution. It is a reflection of what UC was built to be. Technically speaking, the center belongs to the school. It would be hard for me to see them continuing it. One of the biggest problems with these kind of centers is you have to have a motivated leader.”

Most of the controversy seems to stem from an August 2022 Beacon-UCR Research Report entitled “How Increases in Worker Compensation Could Affect Limited-Service Restaurant Prices.” In their letter to UCR Regents, the petitioners stated, “Beacon asserts that legislation allowing fast-food workers a say in setting their pay would mean fast-food price hikes of up to 20 percent or more. Fast-food companies are spending tens of millions of dollars to promote the findings of this report — which they funded. They are trying to convince voters that empowering fast-food workers — most of them women and most of them Latino, Black, or Asian — means a 20 percent ‘food tax.’”

“I’ve always been comfortable working with both sides as long as they’re comfortable with the fact that I’m going to give them the best answer I can on the basis of theory and data, not on the basis of some opinion of what’s morally correct,” said Thornberg. “For a very long time, we have dodged the culture wars. Not this time.”

The report clearly discloses that “This research was supported by the International Franchise Association.” Beacon Economics has prepared studies for both corporations and unions in the past. “We’re never going to sell answers. We’re never going to cozy up to one side or the other. Anybody who engages us in a contract will have to accept the results we come up with. It’s as simple as that. That is a rule we have gone by. I’ve had the opportunity of working, yes, with unions and with business organizations, with chambers and the United Way.”

Most of the conclusions presented in the report can be deduced by common sense, such as this summary statement: “If worker wages in the limited-service restaurant industry are raised, there is little doubt that workers who keep their jobs will be better off. But the change is not costless. Any increase in worker compensation will bring about an increase in prices for consumers, which could hurt lower income households who are already struggling with current inflation in food prices. It will also cause the industry to shrink, with fewer establishments and jobs.” 

The report goes on to conclude, “Compensation increases in the 20% to 60% range will cause prices … to increase between 7% and 22%.” The petitioners argue other studies show “about a half percentage point menu price increase for every 10 percent rise in the minimum wage.” Whatever the real number, minimum wage hikes usually mean higher menu prices and fewer employee hours, according to Harri, a workplace management software company that works with more than 4,000 restaurants. Anyone who has visited a big box department store or fast food restaurant recently knows that self-serve kiosks are already displacing human workers to reduce labor costs.

“This entire episode truly saddens us. In a university environment, academic freedom and debate should be a cherished and protected norm, as should well-conducted empirical research, even if the conclusions of that research conflict with certain ideologies,” wrote Thornberg in an email to clients and business associates. “The ending of this partnership and the excellent work CEFD has done over the past decade for the community is not a win for the University, Beacon Economics or the Inland Empire region as a whole.”

The LA Times story also failed to fact check the letter’s claim that “Thornberg’s name doesn’t appear in school faculty or other directories.” Christopher Thornberg’s listing can be readily found in the UCR Profiles directory under “Affiliate – Research Associate” at profiles.ucr.edu/app/home/search;name=thornberg;org=;title=;phone=;affiliation=Affiliate

“When [UCR] first invited me to do the center, they asked me to come on campus and be a full-time faculty member and run the center. I was what they call an ‘unpaid faculty member.’ So I was basically nominated and approved by the business school to get a faculty position as an adjunct professor. But I wasn’t paid,” said Thornberg.

Beacon Economics will continue to operate in the Inland Empire without the affiliation of UC Riverside. “We’ll probably look for another partner at some point,” said Thornberg. “I’ve got nothing but support from our clients. All of our work that was being run through the university has been converted over to Beacon work. The only thing that’s really changing in terms of our efforts in the Inland Empire is the logo on the top of the page.”

Dr. Christopher Thornberg will be presenting on May 19th for the San Bernardino Council of Governments in Lake Arrowhead.