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Half A Million California Workers Set To Receive $20 Minimum Wage Starting This Week

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California is witnessing a significant increase in pay for around half a million workers.

Fast-food employees in the state saw their minimum wage surge to $20 per hour this week, marking a 25% raise compared to just a week ago. Notably, major chains such as McDonald’s, Pizza Hut, KFC, Subway, and Starbucks are affected by this law, prompting concerns from local franchisees regarding the spike in labor expenses.

Amidst a trend of wage growth in recent years, particularly after a prolonged period of stagnation, fast-food jobs, which are often held by women, immigrants, and people of color, stand out as some of the lowest-paying positions in the U.S. economy, leaving many workers below the poverty line.

Jaylene Loubett, a McDonald’s worker based in Los Angeles, highlights California’s high cost of living, especially in cities like hers, compounded by inflation driving up expenses for essentials like food and bills. Loubett, who shares a one-bedroom apartment with her parents dealing with health issues, hopes her raise will alleviate financial stress and enable her to save for a better living situation.

While the minimum wage outside the fast-food sector in California remains at $16 per hour, variations exist across different cities and counties. Employers offering wages below $20 per hour may face heightened competition for attracting and retaining workers.

The repercussions of increased labor costs are already felt across California’s restaurant industry, with owners considering options like price hikes, automation, reduced hours, or closure. For instance, some Pizza Hut franchisees preemptively laid off delivery drivers, shifting towards delivery apps like Uber Eats and DoorDash, which pass additional fees onto customers.

Various chains, including Jack in the Box, Starbucks, McDonald’s, and Chipotle, anticipate raising prices further. This trend of rising dining costs persists in the U.S., contrasting with overall subdued inflation rates.

Brian Hom, managing two franchise locations of Vitality Bowls, foresees a 5% to 10% price increase on menu items like smoothies and salads to offset the higher wages for his employees. Concerns loom over the sustainability of businesses amidst such changes.

Past research, such as the minimum wage hike in Seattle, suggests that while workers may not lose jobs, they might experience reduced hours. This trend prompts discussions among restaurant owners about potential shifts in workforce dynamics.

The wage hike is a result of negotiations between labor leaders, including the Service Employees International Union, and fast-food companies. It primarily targets chains with at least 60 nationwide locations, with exemptions for select establishments.

The establishment of the Fast Food Council under the state’s industrial relations department accompanies the new law, tasked with formulating industry standards and regulations. Advocates view California’s move as potentially setting a precedent for wage policies, with hopes of broader adoption nationwide.

With the federal minimum wage stagnant at $7.25 per hour, the push for higher minimum wages increasingly unfolds at the local and state levels, with California often leading the charge.

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