What to Know about California’s New Fast Food Minimum Wage
It may have gone into effect on April 1, but California’s new minimum wage for fast-food workers is no joke. The law, originally passed in September 2023 by Democratic governor Gavin Newsom, raises the wage for fast-food workers to $20 an hour—up from the statewide minimum of $16.60. It also develops a Fast Food Council with the ability to increase the $20/hour wage “every year through 2029 by 3.5 percent, or the change in averages for the U.S. Consumer Price Index for urban wage earners and clerical workers, whichever is lower,” according to the AP. This new minimum wage applies to restaurants with a minimum of 60 locations across the United States, and there is an exception for businesses that make and sell their own bread.
The Basics
With this law in effect, fast-food workers in California will enjoy the highest guaranteed base salary in the industry. Historically, labor unions across the state have made attempts to rally fast-food employees for better wages and working conditions. The deal finally laid to rest the arguments that labor unions and business groups were having over how to properly regulate the fast-food industry. As noted by the AP, “In exchange for higher pay, labor unions have dropped their attempt to make fast food corporations liable for the misdeeds of their independent franchise operators in California, an action that could have upended the business model on which the industry is based. The industry, meanwhile, has agreed to pull a referendum related to worker wages off the 2024 ballot.” In the past 2 years alone there were 450 strikes across California from the Service Employees International Union with regards to wages and working conditions.
The Pushback
This all sounds well and good for average fast-food workers, who currently comprise a workforce of 3.8 million peoplein the United States; however, the pushback is mounting. Fears of layoffs and reduced profits are very real among the restaurant owners in California. Two major Pizza Hut franchises in California have eliminated their delivery service as a result of this bill, forcing customers to use other delivery services like DoorDash and GrubHub instead. Other franchise owners complain they will have to raise prices in order to accommodate the new minimum wage, or even resort to automation in an effort to cut labor costs. And California public schools are concerned they won’t be able to compete for cafeteria staff in the wake of this law.
But is it really so impossible to start paying fast-food workers a more reasonable wage? According to The Guardian, “An analysis of financial data over the past decade by researchers at the Roosevelt Institute found the fast-food industry has more than enough profits to raise wages without affecting prices and employment and have been hiking prices far beyond their operating costs for years.”
As regulations change across the nation, keep ARF Financial by your side for the latest updates on what might affect your small business. And if you’re in need of a small business loan, our seasoned loan consultants are here to help you capitalize on your business’s potential—offering fast access to the most innovative and flexible loan products available. From lines of credit to working capital loans and everything in between, we make business financing easy!
Your privacy is important to us. ARF Financial will never sell or rent your information to any third party. Click here for more information about our privacy policy.