New minimum wage for fast food workers in California starts this Monday

Livermore, California, Most workers in the fast food sector California will earn at least $20 an hour starting Monday, when a new law to give more financial security to a traditionally low-income profession is set to take effect, which could push up prices in a state already known for high labor costs. Has threatened.

Democrats in the state legislature passed the rule last year in part in recognition that many of the 500,000 people who work at fast food restaurants are not teenagers earning a few pocket money, but working to support their families. The ones doing it are adults.

This includes immigrants like Ingrid Vilorio, who said she has started working McDonald’s Shortly after arriving in the United States in 2019. Working in fast food was his full-time job until last year. Now he works eight hours a week at Jack in the Box and combines it with other jobs.

“A $20 increase is great. I wish it had come sooner,” Vilorio said. “Because I wouldn’t be looking for so many different jobs anywhere else.”

The legislation was supported by the union representing fast food franchise owners. But since its passage, many franchise owners have lamented the law’s impact on their businesses, especially given the downturn in California’s economy.

Alex Johnson is the owner of 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. Sales have declined in 2024, he said, forcing him to lay off his administrative staff and turn to his parents for help with salaries and human resources.

Raising the salaries of his employees would cost Johnson approximately $470,000 annually. It will have to raise prices at its establishments between 5% and 15%, he said, and it no longer has any employees and does not plan to open new stores in California.

“I try to treat my employees well. I pay them as much as I can. But this law is greatly impacting our operations,” Johnson said.

“I have to consider selling and even closing my business,” he said. “The profit margin becomes very small when you take into account all the other expenses.”

Over the past decade, California has doubled its minimum wage to $16 an hour for most workers. A major concern at the time was whether the increase might cause some workers to lose their jobs because of increased expenses for employers.

Instead, the data shows that wages have risen and employment has not declined, said Michael Reich, a professor of labor economics at the University of California-Berkeley.

“I was surprised by how little, or how difficult, it was to detect the effects of unemployment. If anything, we found a positive impact on employment,” Reich said.

Additionally, Reich said that while the minimum wage in the state is $16 an hour, many larger cities have their own minimum wage standards that set a higher figure. For many fast-food restaurants, that means a $20 per hour increase.

The legislation reflects a carefully negotiated agreement between the fast food industry and unions, who have been at loggerheads for nearly two years in a dispute over wages, benefits and legal liabilities. The bill began in private negotiations between unions and the sector, which included the unusual signing of confidentiality agreements.

The rule affects restaurants that offer limited or no table service and that are part of a national chain with at least 60 establishments in the country. Restaurants that operate within a grocery store are exempt, as well as restaurants that produce and sell bread as a stand-alone menu item.

Initially, it appeared that Panera Bread restaurants were affected by the bread discount. A Bloomberg News report said the change would benefit Greg Flynn, a wealthy campaign donor to state Governor Gavin Newsom. But the state government indicated that the wage hike affects the chain as it does not make flour in its restaurants. Flynn has also announced that he will pay his employees at least $20 an hour.