Fast Food Workers In California Will Earn $20 Per Hour Starting Tomorrow.

Photo: John Margolis collection, Library of Congress. Freestanding fast food restaurants are clearly included in the new law, but what about fast food outlets in airports?
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The majority of fast food employees in California will get a wage of at least $20 an hour beginning tomorrow (Easter Monday)  when a new law is scheduled to take effect to enhance historically low-paid jobs–of course this means that fast food may become even more expensive in a state that already has a very high cost of living.

Democrats in the state Legislature passed the law last year, because many of the more than a half million people who work in fast food restaurants inthe state are not teenagers earning pocket money, but adults working to support their families.

However some question whether the effect of the law will be to force many businesses to close, change opening hours,  or change the way they do business

Although US$20 per hour sounds like a lot for unskilled work, many wait staff in sit down restaurants in the state do earn a great deal more, and retail staff in California stores already earn around $20 per hour.

The law was supported by the trade association representing fast food franchise owners. But since it passed, many franchise owners have complained about the impact the law is having on them, especially during California’s slowing economy.

Alex Johnson, a businessman who owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area spoke to AP News. He said sales have slowed in 2024, prompting him to lay off his office staff and rely on his parents to help with payroll and human resources.

Increasing his employees’ wages will cost Johnson about $470,000 each year. He will have to raise prices anywhere from 5% to 15% at his stores, and is no longer hiring or seeking 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 hitting our operations hard,” Johnson said.

“I have to consider selling and even closing my business,” he said. “The profit margin has become too slim when you factor in all the other expenses that are also going up.”

Over the past decade, California has doubled its minimum wage for most workers to $16 per hour. A big concern over that time was whether the increase would cause some workers to lose their jobs as employers’ expenses increased.

Instead, data showed wages went up and employment did not fall, said Michael Reich, a labor economics professor at the University of California-Berkeley.

“I was surprised at how little, or how difficult it was to find disemployment effects. If anything, we find positive employment effects,” Reich said.

Plus, Reich said while the statewide minimum wage is $16 per hour, many of the state’s larger cities have their own minimum wage laws setting the rate higher than that. For many fast food restaurants, this means the jump to $20 per hour will be smaller.

The law reflected a carefully crafted compromise between the fast food industry and labor unions, which had been fighting over wages, benefits and legal liabilities for close to two years.

The law originated during private negotiations between unions and the industry, including the unusual step of signing confidentiality agreements.

The law applies to restaurants offering limited or no table service and which are part of a national chain with at least 60 establishments nationwide.

Restaurants operating inside a grocery establishment are exempt, as are bakery-restaurants producing and selling fresh bread as a stand-alone menu item.

At first, it appeared the bread exemption applied to Panera Bread restaurants. Bloomberg News reported the change would benefit Greg Flynn, a wealthy campaign donor to Newsom.

But the Newsom administration said the wage increase law does not apply to Panera Bread because the restaurant does not make the dough hat it bakes to make bread on-site, but has it delivered from a central dough-making facility.

Also, Flynn has announced he would pay his workers at least $20 per hour.

Panera Bread is an upmarket (and rather pricey) restaurant chain that also offers loaves and cakes baked onsite that customers can take away with them.

However, the new law remains very complicated as to who is entitled to the $20 minimum wage.

for example, say you work at a fast food restaurant or coffee shop that bears the name of a national chain. Under California law, you’re entitled to be paid at least $20 an hour starting Monday.

Say you work at one of those stores, inside a grocery store. The grocery store, your employer, is exempt under the law. You’ll keep getting your current wages.

But say you assemble burgers, scoop ice cream or prepare Frappuccinos at one of those stores, and it’s inside another store, but the bigger store isn’t really a “grocery” because less than half of its revenues are made off groceries. What then?

California has provided an  an 18-item FAQ  to answer some of these questions.

Source: VOA/AP.
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