Most fast food workers in California will be paid at least $20 an hour starting Monday, when a new law is set to take effect that provides greater financial security to a historically low-wage profession while threatening to raise prices in a state already known for its high costs. life.
Democrats in the State Legislature passed the law last year partly as a recognition that many of the more than 500,000 people who work in fast food restaurants are not teenagers earning a little spending money, but adults working to support their families.
That includes immigrants like Ingrid Vilorio, who said she started working at McDonald’s shortly after arriving in the United States in 2019. Until last year, fast food was her full-time job. She now works about eight hours a week at Jack in the Box while working another job.
“A $20 increase is great. I wish it had happened sooner,” Vilorio said through a translator. “Because I wouldn’t be looking for so many other jobs in different places.”
The legislation was supported by a trade association representing fast food franchise owners. But since it was passed, many franchise owners have complained about the impact the law is having on them, especially during the California crisis. slowing economy.
Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. He said sales slowed in 2024, prompting him to lay off office staff and rely on parents to help with payroll and human resources.
Raising his employees’ wages would cost Johnson about $470,000 a year. It will have to raise prices at its stores by 5% to 15% and is no longer hiring or trying to open new stores in California, he said.
“I try to do right by my employees. I pay them as much as I can. But this law does have a big impact on what we do,” Johnson said.
“I will have to consider selling and even closing my business,” he said. “Profits have become too small when you take into account all the other costs that are also rising.”
Over the past decade, California has doubled its minimum wage for most workers to $16 an hour. A major concern at the time was whether the increase would lead to some workers losing their jobs due to increased costs for employers.
Instead, the data showed that wages rose but employment did not fall, said Michael Reich, a professor of labor economics at the University of California, Berkeley.
“I was surprised at how little or how difficult it was to detect the effects of unemployment. If anything, we find a positive impact on employment,” Reich said.
Additionally, Reich said, while the statewide minimum wage is $16 an hour, many of the state’s larger cities have their own minimum wage laws that set a higher rate. For many fast food restaurants, that means a smaller jump to $20 an hour.
The law reflected a carefully crafted compromise between the fast food industry and unions, which had been fighting over wages, benefits and legal obligations for nearly two years. The law emerged from private negotiations between unions and industry, including the unusual step signing confidentiality agreements.
The law applies to restaurants that offer limited or no table service and are part of a national chain of at least 60 locations nationwide. Restaurants operating inside food establishments, as well as restaurants producing and selling bread as a separate menu item, are exempt from paying the tax.
At first, it appeared that the bread tax exemption would apply to Panera Bread restaurants. Bloomberg News reported that the change would benefit Greg Flynn, a wealthy Newsom campaign donor. But the Newsom administration said the wage hike law applies to Panera Bread because the restaurant doesn’t make its dough in-house. In addition, Flynn announced that he would pay your workers at least $20 an hour.
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Beam reported from Sacramento, California.