Starting Monday, most fast food workers in California will be paid at least $20 per hour, a sizeable new life improvement that offers them more financial security while also threatening to raise prices in a state already known for its high cost of living.
The law was passed last year by Democrats who control the state Legislature, in part, an acknowledgment that many of those more than 500,000 people who work in fast-food restaurants are not teenagers earning pocket change, but adults trying to support their families.
Most fast food workers in California will be paid at least $20 an hour beginning Monday when a new law is scheduled to kick in, giving more financial security to an historically low-paying profession — with some chains threatening to raise prices. https://t.co/moyeVLQVSN pic.twitter.com/N1U3w1Pnu0
— ABC News (@ABC) April 1, 2024
That includes immigrants like Ingrid Vilorio, who said she had started at a McDonald’s a short time after coming to the United States in 2019. Until last year, fast food was her full-time job. Now, she works about eight hours a week at a Jack in the Box while working other jobs.
“The $20 increase would make a huge difference. I just wish this would have come before,” Vilorio said through an interpreter. “Because I wouldn’t have been looking for several other jobs in different places.
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The association representing fast-food franchise owners supported the law, but since its passage, many members—especially in the environment of California’s slowing economy—have bemoaned its effects on them.
Alex Johnson runs 10 Auntie Anne’s Pretzels and Cinnabon restaurants across the San Francisco Bay Area. He said that sales have kept slowing all through 2024, leading him to lay off his office staff and rely on his parents to help with payroll and human resources.
Johnson will spend about $470,000 more each year on wages for his employees. He said he has already increased the prices in his stores and no longer hires or looks to open new locations in California.
“I try my best for my employees. I pay them as much as I can. But, this law really hits hard on our operations,” Johnson said.
I even have to think of selling and closing the business. The profit margin has become too thin, considering all other expenses that have also been heading north.
Over the last decade, California has doubled the minimum wage that most of its workers need to be paid to $16 an hour. One huge concern over that time: Is it possible that such a raise could lead to some workers being priced out of their jobs, as it adds to employers’ expenses?
Data “showed,” said Michael Reich, a labor economics professor at the University of California-Berkeley, “wages went up and did not fall, employment.
“I was astounded at how little or how difficult it was to find disemployment effects. If anything, we find positive employment effects,” Reich said.
Plus, Reich says, while it is the one being so broadly discussed, the statewide minimum wage of $16 an hour is the one being discussed so widely. Many of the state’s most populous cities have their own minimum wage laws, which set the rate higher than that. For many fast food restaurants, it means the jump to $20 an hour will be relatively slighter.
The law follows hard-fought compromise between the fast-food industry and organized labor, which had dragged on issues of wages, benefits, and legal liability for almost two years. The law was born from private negotiations between the unions and the industry, right down to the unusual step of signing confidentiality agreements.
This law applies to the restaurant with limited or no table service and to part of the national chain having at least 60 establishments across the nation. Such law does not extend itself to restaurants operated within a grocery establishment or to restaurants producing and offering bread as its stand-alone menu item for sale.
The main exemptions have largely looked as if they would specifically apply to Panera Bread restaurants. Bloomberg News had reported that Flynn would potentially benefit from the change. He’s a wealthy campaign donor to Newsom. But the Newsom administration says the wage-increase law does apply to Panera Bread because the restaurant doesn’t make dough on-site. And Flynn has pledged that he will be paying his workers at least $20 an hour.
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