California’s New $20 Minimum Wage

After a nearly 2-year long debate between labor unions and the fast-food industry, on April 1, 2024, California’s new $20-an-hour minimum wage law for fast-food restaurants went into effect causing California-based restaurants to not only increase the price of menu items but cut over 10,000 jobs. The wage law applies to fast-food chains with more than 60 establishments nationally. Many of these restaurants began making job cuts right when Governor Newsom signed off on the Bill, before it even went into effect, to account for the impending financial demands.

The intent of the law was to give fast-food employees more financial freedom, a living wage, in a state notorious for its high cost of living—but this $4 increase has sparked differing reactions between employees and franchise owners. Supporters of the law have recognized that of the more than 500,000 people working in the fast-food industry, many of them are adults working to support their families rather than teenagers earning spending money.

However, one Auntie Anne’s Pretzels franchise owner explained that increasing employees’ wages will cost him about $470,000 each year, that he will increase his prices anywhere between 5 and 15%, and that he is no longer hiring or seeking new locations in California. Another franchise owner, Scott Rodrick owner of a McDonald’s franchise, explained that there are limits to how much he can increase prices, “I can’t charge $20 for happy meals.” These demands leave owners in a hard spot—trying to balance increased prices for consumers, while also affording to compensate their employees more.

Other opponents of the law are consumers, who are concerned with the increased price of menu items and the future of the job market.?Many note that the increasing prices are deterring them from going to fast-food restaurants. Additionally, this law has caused many restaurants to fast-track the use of robotics in stores to cut back on wage costs, decreasing the number of employees needed to operate stores.

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For more information regarding how minimum wage laws may affect your business, contact the qualified attorneys at Rock, Fusco & Connelly, LLC