A $20 minimum wage for fast food workers will go into effect in California on Monday

LIVERMORE, Calif. (AP) – Most fast food workers in California will earn no less than $20 an hour starting Monday, when a brand new law is about to go into effect that will provide greater financial security for a historically low-wage occupation while threatening to lift prices to some extent already familiar from high maintenance costs.

Democrats in the state Legislature passed the law last 12 months, in part to acknowledge that most of the greater than 500,000 individuals who work at fast food restaurants usually are not teenagers earning money to spend, but adults working to support their families.

This includes immigrants like Ingrid Vilorio, who says she began working at McDonald’s shortly after arriving in the United States in 2019. Fast food was her full-time job until last 12 months. Now he works about eight hours every week at Jack in the Box while also working one other job.

“A $20 raise is great. It’s a pity it didn’t happen earlier,” Vilorio said through a translator. “Because I wouldn’t be looking for so many other jobs in different places.”

The bill was supported by a trade association representing fast food franchise owners. However, since its passage, many franchise owners have lamented the impact the law has had on them, especially during California’s slowing economy.

Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. He said sales dropped in 2024, prompting him to put off office staff and switch to oldsters for help with payroll and human resources.

Increasing his employees’ pay will cost Johnson about $470,000 a 12 months. It will should raise prices in its stores by 5% to fifteen% and will now not hire or attempt to open recent locations in California, he said.

“I try to do right by my employees. I pay them as much as I can. But this law hits our business really hard,” Johnson said.

“I have to consider selling or even closing the company,” he said. “The profit margin has become too small when you take into account all the other expenses that are also increasing.”

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Over the past decade, California has doubled the minimum wage for most workers to $16 an hour. At that point, the massive issue was whether the raise would cause some employees to lose their jobs on account of increased employer spending.

Instead, the information showed that wages rose and employment didn’t fall, said Michael Reich, a professor of labor economics on the University of California, Berkeley.

“I used to be surprised by how little or how difficult it was to seek out the results of unemployment. In any case, we discover positive effects on employment,” Reich said.

Additionally, Reich said that while the statewide minimum wage is $16 an hour, most of the state’s larger cities have their very own minimum wage laws setting the speed higher. For many fast food restaurants, which means the jump to $20 an hour will be smaller.

The bill reflected a rigorously crafted compromise between the fast food industry and unions, which had been fighting for nearly two years over wages, advantages and legal obligations. The law was created during private negotiations between trade unions and the industry, which included the weird step of signing confidentiality agreements.

The act applies to restaurants offering limited or no waiter service, that are a part of a national chain of no less than 60 establishments throughout the country. Restaurants operating in food premises are exempt, as are restaurants producing and selling bread as an independent menu item.

Initially, it appeared that the bread exemption applied to Panera Bread restaurants. Bloomberg News reported that the change would profit Greg Flynn, a wealthy Newsom campaign donor. However, the Newsom administration said the Raise the Wage Act applies to Panera bread since the restaurant doesn’t produce the dough on-site. Flynn also announced he would pay his employees no less than $20 an hour.