LIVERMORE, California — Most fast-food workers in California will be paid at least $20 an hour starting Monday, when a new law is planned to provide more financial security to a historically low-wage profession, while prices threaten to rise in a state already known for high cost. of life.
Democrats in the state Legislature passed the law last year in part in recognition that many of the more than 500,000 people who work at fast-food restaurants are not teenagers earning some pocket money, but adults who work to support their families.
This includes immigrants like Ingrid Vilorio, who said she started working at a McDonald’s shortly after arriving in the United States in 2019. Fast food was her full-time job until last year. Now she works about eight hours a week at a Jack in the Box while working other jobs.
“The $20 increase is great. I wish this had happened sooner,” Vilorio said through a translator. “Because I wouldn’t have looked for so many other jobs in different places.”
The law was supported by the trade association that represents franchisees of fast-food restaurants. But since the law passed, many franchise owners have complained about the impact the law has had on them, especially during California’s slowing economy.
Alex Johnson owns ten restaurants Auntie Anne’s Pretzels and Cinnabon in the San Francisco Bay Area. He said sales have slowed in 2024, prompting him to lay off his office staff and rely on his parents for help with payroll and human resources.
Raising his workers’ wages will cost Johnson about $470,000 each year. He will have to raise prices at his stores by 5% to 15% and is no longer hiring or opening new locations in California, he said.
“I try to do the right thing for my employees. I pay them as much as I can. But this law really hits our businesses hard,” Johnson said.
“I have to consider selling my business and even closing it,” he said. “The profit margin has become too small if you include all other expenses that are also increasing.”
Over the past decade, California has doubled the 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 as employer costs increased.
Instead, data showed wages rose and 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 find unemployment effects. In any case, we find positive consequences for employment,” Reich said.
Additionally, Reich said that while the statewide minimum wage is $16 per hour, many of the state’s larger cities have their own minimum wage laws that push the rate higher. For many fast food restaurants, this means the jump to $20 per hour will be smaller.
The law reflected a carefully crafted compromise between the fast-food industry and unions, which had been feuding over wages, benefits and legal obligations for nearly two years. The law emerged during private negotiations between unions and the industry, including the unusual step of signing confidentiality agreements.
The law applies to restaurants that offer little or no table service and that are part of a national chain with at least 60 locations nationwide. Restaurants that operate in a grocery store are exempt, as are restaurants that produce and sell bread as a standalone menu item.
At first, it appeared the bread exemption applied to Panera Bread restaurants. Bloomberg News reported that the change would benefit Greg Flynn, a wealthy Newsom campaign donor. But Newsom’s administration said the wage increase law does apply to Panera Bread because the restaurant does not make dough on site. Flynn also announced he would pay his employees at least $20 an hour.
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Beam reported from Sacramento, California.