LIVERMORE, California — The majority of workers in the fast food sector in California will earn at least $20 an hour starting Monday, when a new law is scheduled to take effect to give more financial security to a traditionally low-income profession that threatened to raise prices in a state already known for high labor costs. life.
Democrats in the state legislature passed the rule last year in part in recognition that many of the 500,000 people who work in fast-food restaurants are not teenagers earning some pocket money, but adults working to support their families. .
That includes immigrants like Ingrid Vilorio, who said she started working at a McDonald’s shortly after arriving in the United States in 2019. Working in fast food was her full-time job until last year. She now works eight hours a week at a Jack in the Box and combines it with other jobs.
The law was supported by the association that represents fast food franchise owners. But since its passage, many franchise owners have lamented the law’s impact on their businesses, especially given the slowdown in the California economy.
Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. Sales are down in 2024, he said, prompting him to lay off his administrative staff and turn to his parents to help with salaries and human resources.
Raising his employees’ salaries will cost Johnson about $470,000 annually. He will have to raise prices between 5% and 15% at his stores and no longer has employees nor plans to open new stores in California, he said.
“I try to treat my employees well. I pay them as much as I can. But this law is greatly affecting our operations,” Johnson said.
“I have to consider selling and even closing my business,” he added. “The profit margin has become too small when you take into account all the other expenses that arise.”
In the last decade, California has doubled its minimum salary for most workers at $16 an hour. A major concern at that time is whether the increase could cause some workers to lose their jobs by increasing employers’ expenses.
Instead, the data show that wages rose and employment did not fall, said Michael Reich, a professor of labor economics at the University of California-Berkeley.
“I was surprised how few, or how difficult, it was to find unemployment effects. If anything, we found positive effects on employment,” Reich said.
Additionally, Reich noted 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 the increase to $20 an hour will be smaller.
The law reflects a carefully reached compromise between the fast food industry and unions, which have been at loggerheads for about 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 are those that produce and sell bread as a stand-alone menu.
Initially, it appeared that the bread exemption affected Panera Bread restaurants. A Bloomberg News report noted that the change would benefit Greg Flynn, a wealthy campaign donor to the state’s governor, Gavin Newsom. But the state government indicated that the salary increase does affect that chain because it does not make the dough in its restaurants. Flynn has also announced that he will pay his workers at least $20 an hour.
Source: AP
