Most fast-food workers in California will be paid at least $20 an hour starting Monday, when a new law is expected to take effect to give more financial security to a historically low-wage profession while threatening to raise prices in a state already known for its high costs. of life.
Democrats in the state Legislature passed the law last year in part to recognize 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 a McDonald’s shortly after arriving in the United States in 2019. Fast food was her full-time job until last year. Today, she works about eight hours a week at a Jack in the Box while holding other jobs.
“The $20 increase is great. I wish it would have 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 representing fast-food franchise owners. But since its passage, many franchise owners have lamented the impact the law has on them, particularly during California’s crisis. economic slowdown.
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 his office staff and rely on his parents to help manage payroll and human resources.
Raising his employees’ salaries will cost Johnson about $470,000 a year. It will have to raise prices 5% to 15% at its stores and is no longer hiring or looking to open new locations in California, he said.
“I try to do right by my employees. I pay them as much as I can. But this law is really hurting our operations,” Johnson said.
“I have to consider selling or even closing my business,” he said. “The profit margin has become too thin when you take into account all the other expenses that are also increasing.”
Over the past decade, California has doubled the minimum wage for most workers, bringing it to $16 an hour. One of the big concerns at that time was whether this increase would cause some workers to lose their jobs due to increased employer spending.
Instead, the data shows that wages have increased and employment has not fallen, said Michael Reich, a professor of labor economics at the University of California, Berkeley.
“I was surprised how little or how difficult it was to see the effects of unemployment. On the contrary, we see positive effects on employment,” Reich said.
Additionally, Reich said that although the statewide minimum wage is $16 an hour, many larger cities in the state have their own minimum wage laws that set a higher rate. For many fast food restaurants, that means the jump to $20 an hour will be smaller.
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The law reflects a carefully crafted compromise between the fast food industry and unions, who have been fighting over wages, benefits and legal responsibilities for nearly two years. The law arose during private negotiations between unions and industry, including the unusual step of sign confidentiality agreements.
The law applies to restaurants that offer limited or no table service and are part of a national chain with at least 60 locations nationwide. Restaurants that operate in a grocery establishment are exempt, as are restaurants producing and selling bread as a stand-alone menu item.
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At first, it appeared that the bread exemption applied to Panera Bread restaurants. Bloomberg News reported that the change would benefit Greg Flynn, a wealthy Newsom campaign donor. But the Newsom administration has said the Raise the Wage Act applies to Panera Bread because the restaurant doesn’t make dough on site. Additionally, Flynn announced that he pay your workers at least $20 per hour.
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Beam reported from Sacramento, California.