Most fast-food workers in California will be paid at least $20 an hour starting Monday, when a new law is set to take effect that will bring more financial security to a historically low-paying profession while threatening price hikes in a state already is known for its high cost of life.
Democrats in the state legislature passed the law last year Partly in recognition that many of the more than 500,000 people who work in fast food restaurants are not teenagers earning some pocket money, but rather 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 her full-time job until last year. Now she works about eight hours a week at Jack in the Crate while I work other jobs.
“The $20 increase is great. I wish this had come sooner,” Vilorio said through a translator. “Because I wouldn’t have looked for so many other jobs in other places.”
The law was supported by the trade association representing fast food franchise owners. But since its passage, many franchise owners have complained about the impact the law is having on them, particularly in California slowing economy.
Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. He said sales 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 at his stores by about 5 to 15 percent and will no longer hire or open new locations in California, he said.
“I try to please my employees. I pay them as much as I can. But this law really hits our business hard,” Johnson said.
“I have to think about selling or even closing my business,” he said. “The profit margin has become too small when you take into account all the other expenses, which are also increasing.”
Over the last decade, California has doubled its minimum wage to $16 an hour for most workers. There were major concerns at the time about whether the increase would cause some workers to lose their jobs as employers’ spending increased.
Instead, the data showed that wages rose and employment did not decline, said Michael Reich, a professor of labor economics at the University of California-Berkeley.
“I was surprised at how little or how difficult it was to determine the impact on unemployment. We tend to see positive employment effects,” said Reich.
Reich also said that while the statewide minimum wage is $16 an hour, many of the state’s larger cities have their own minimum wage laws that set the rate higher. For many fast food restaurants, this means the jump to $20 an hour will be smaller.
The law reflected a carefully crafted compromise between the fast-food industry and unions, which had been fighting for nearly two years over wages, benefits and legal obligations. The law emerged as part of private negotiations between unions and industry, including the unusual move Signing confidentiality agreements.
The law applies to restaurants that offer limited or no table service and are part of a national chain with at least 60 locations nationwide. Restaurants Foods that are operated in a grocery store are exempt, as are restaurants that make and sell bread as a stand-alone menu item.
At first it appeared that a bread exemption would apply to Panera Bread restaurants. Bloomberg News reported that the change would benefit Greg Flynn, a wealthy campaign donor to Newsom. However, the Newsom administration said the wage increase law applies to Panera Bread because the restaurant does not make dough on-site. Furthermore, Flynn announced this pay its workers at least $20 an hour.
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Beam reports from Sacramento, California.