LIVERMORE, Calif. (AP) — Most fast-food workers in California will be paid at least $20 an hour starting Monday. At the time, the new law was slated to provide greater financial protection for the historically low-wage industry. A state already known for its high cost of living.
Democrats in the state legislature The law was passed last year Acknowledging that many of the more than 500,000 people who work in fast food restaurants are not young people earning a little money, but adults working to support their families.
That includes immigrants like Ingrid Vilorio, who said she started working at McDonald's shortly after arriving in the U.S. in 2019. Fast food was his full-time job until last year. Now, she works eight hours a week at Jack in the Box while working other jobs.
“Raising $20 is great. I wish it had come sooner,” Vilorio said through a translator. “Because I wouldn't have looked for so many other jobs in different places.”
A trade association representing fast-food franchisees supported the legislation. But since its passage, many franchise owners, especially in California, have lamented the impact the law will have on them. A slow economy.
Alex Johnson owns 10 Auntie Anne's Pretzels and Cinnabon restaurants in the San Francisco Bay Area. He said sales were down in 2024, forcing him to lay off his office staff and rely on parents to help with payroll and human resources.
Increasing his employees' wages costs Johnson $470,000 each year. He will have to raise prices anywhere from 5% to 15% at his stores and doesn't want to hire or 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 really hurts our operations,” Johnson said.
“I have to consider selling and closing my business,” he said. “The profit margin has become very slim when you factor in all the other costs that are going up.”
Over the past decade, California has doubled its minimum wage to $16 an hour for most workers. A big concern at the time was whether the increase would cause some workers to lose their jobs because of increased costs for employers.
Instead, the data show wages increased and employment did not decrease, said Michael Reich, a professor of labor economics at the University of California-Berkeley.
“I was surprised at how small or how difficult it is to detect unemployment effects. If anything, we see positive employment effects,” Reich said.
And while the statewide minimum wage is $16 an hour, many of the state's largest cities have their own minimum wage laws, Reich said. For many fast food restaurants, this means $20 an hour.
The legislation reflected a carefully crafted compromise between the fast-food industry and labor unions, which have been fighting over wages, benefits and legal liability for two years. The Act emerged during private negotiations between unions and industry, which included extraordinary action Signing confidentiality agreements.
The law applies to restaurants that are limited or offer table service as part of a national chain with at least 60 establishments nationwide. Restaurants operating within a grocery establishment are exempt, such as restaurants that manufacture and sell bread as a separate menu item.
Originally, the bread exemption applied to Panera Bread restaurants. Bloomberg News reported that the change would benefit Greg Flynn, a wealthy campaign donor to Newsom. But Newsom's administration said the higher-wage law applies to Panera Bread because the restaurant doesn't make the dough on site. Also, Flynn announced His workers are paid at least $20 an hour.
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BEAM reports from Sacramento, California.
