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Most fast food workers in California will now make at least $20 an hour due to a new law that took effect April 1.
It aims to provide greater financial security to employees in the historically low-wage fast food industry. However, there have been warnings that the move will increase the cost of fast food in a state already known for its high cost of living.
The legislation was passed in 2023 by Democrats in an effort to recognize low wages in the fast-food restaurant trade, which employs more than 500,000 people across California. The law applies to restaurants that offer limited or no table service and that are part of a national chain of at least 60 establishments nationwide.
Paying $20 per hour is well above the state’s general minimum wage of $16 per hour. It is also more than double the current federal minimum wage of $7.25 per hour.
But the new law has drawn criticism from some fast food companies, who claim they will be forced to raise the cost of products for consumers to fund the additional expenses. A number of companies are looking for loopholes as a way to avoid paying higher wages.
Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. The fast food restaurant owner says raising his workers’ wages to $20 an hour would cost him about $470,000 a year. In order to finance the additional costs, he says he will have to raise prices by 5% to 15%. Additionally, it is no longer hiring or taking on new locations in California.
“I try to do right by my employees. I pay them as much as I can. But this new law hurts our operations badly.” Tell The Independent. “I have to think about selling my business and even closing it. The profit margin has become very slim when you take into account all the other expenses that are also rising.
The rise in the minimum wage highlights the challenges companies face as they strive to nurture workers to help generate a well-paid, secure, and loyal workforce, while keeping prices affordable for consumers as the cost of living continues to rise.
Image: Envato Elements
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