Livermore, California is set to see a significant change in the fast-food industry starting Monday, with workers in the sector receiving a pay raise to at least $20 an hour. This new law aims to provide more financial stability to a profession historically known for low wages, but it also raises concerns about potential price hikes in a state already grappling with a high cost of living.
The legislature in California, dominated by Democrats, passed this law last year, recognizing that many of the over 500,000 individuals employed in fast-food establishments are not merely teenagers earning pocket money but are adults supporting their families. Immigrants like Ingrid Vilorio, who moved to the United States in 2019 and worked at McDonald’s, view this wage increase positively.
Vilorio shared that the $20 raise is appreciated, though she wishes it had come sooner to alleviate the need for multiple other jobs to make ends meet. This new law garnered support from the trade association representing fast-food franchise owners, but it has also been met with opposition from many franchise owners undergoing challenges during California’s slowing economy.
For Alex Johnson, who operates multiple Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area, the wage hike will result in significant annual costs. To offset these expenses, he faces the possibility of raising prices at his establishments by 5% to 15% and forgoing new hires or the expansion of his business in California.
Over the last decade, California has steadily increased its minimum wage to $16 per hour for most workers. Despite concerns about job losses due to escalating costs for employers, data from Michael Reich, a labor economics professor at the University of California-Berkeley, indicated that wages rose without a corresponding decline in employment rates.
Notably, while the statewide minimum wage remains at $16 per hour, several larger cities in California have implemented their own higher minimum wage laws. This means that the $20 per hour benchmark for fast-food workers may not represent as dramatic a leap for establishments in these areas. This new law resulted from intricate negotiations between the fast-food industry and labor unions, following disputes over wages, benefits, and legal issues for nearly two years.
In the ever-evolving landscape of the fast-food industry, this wage increase law will only apply to specific types of restaurants, excluding those within grocery stores or primarily focused on selling bread. The exemption initially thought to benefit Panera Bread restaurants has been clarified by the Newsom administration, ensuring that the chain also adheres to the $20 per hour minimum wage for its employees.