Most fast-food workers in California will make at least $20 an hour starting Monday, when a new law sets out to provide more financial security to historically low-wage professions while threatening to cut costs in a state known for its high costs. increase price. of life.
Democrats in the state Legislature passed the law last year in part in recognition that many of the more than 500,000 workers at fast-food restaurants are not teenagers earning pocket money but adults working to support their families.
They include immigrants like Ingrid Vilorio, who said she started working at McDonald’s shortly after arriving in the United States in 2019. Until last year, fast food was her full-time job. Now, she works about eight hours a week at Jack in the Box, along with other jobs.
“A $20 raise is great. I hope this comes sooner,” Vilorio said through an interpreter. “Because I’m not going to be looking for so many other jobs in different places.”
The law is backed by a trade association representing fast-food franchise owners. But since the bill’s passage, many franchise owners have lamented the impact the law has had on them, especially as California’s economy slows.
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 office staff and rely on his parents to help with payroll and human resources.
Increasing employee wages will cost Johnson about $470,000 a year. He said he would have to raise prices at his stores by 5% to 15% and no longer hire or seek to open new stores in California.
“I try to do the right thing for my employees. I pay them as much as I can. But this law really hits our operations hard,” Johnson said.
“I have to consider selling or even closing my business,” he said. “When you factor in all the other expenses that are going up as well, the margins become so thin.”
Over the past decade, California has doubled the minimum wage for most workers to $16 an hour. A big question during that time was whether the price increases would cause some workers to lose their jobs as employers’ fees increased.
Instead, the data shows wages are rising and employment is not falling, said Michael Reich, a professor of labor economics at the University of California, Berkeley.
“I was surprised that it was so small or so difficult to find the unemployment effects. If anything, we found a positive employment effect,” Reich said.
Additionally, Reich said that while the statewide minimum wage is $16 an hour, many of the state’s largest cities have their own minimum wage laws that set wages higher than that. For many fast-food restaurants, that means the $20-an-hour increase will be smaller.
The law reflects a carefully crafted compromise between the fast-food industry and unions, which have been wrangling over wages, benefits and legal liability for nearly two years. The law emerged from private negotiations between unions and industry, including the unusual step of signing 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 operating within grocery stores are exempt from this restriction, as are restaurants that produce and sell bread as a stand-alone menu item.
At first, the bread exemption appeared to apply to Panera Bread restaurants. Bloomberg News reports that the change will benefit Newsom’s wealthy campaign donor Greg Flynn. But the Newsom administration said the wage increase law does apply to Panera Bread because the restaurant does not make its dough on site. In addition, Flynn announced that he would pay his employees at least $20 an hour.
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