Effective April 1st the minimum wage for California fast-food workers will increase to a minimum rate of $20.00 for the fast-food industry. The increase was championed by workers and worker’s rights advocates as this increase directly helps those deal with the high consumer and high housing cost in California. Like any change there is a lot of debate on the issue of minimum wage, those that may be exempt and the impact on the consumer and other industries.
While California’s minimum wage increased to $16.00 per hour January 1st, 2024, the 4-dollar difference will put pressure on other industries that are set at the minimum wage to increase their rate to attract and retain top talent. There is concern on the consumer level that the increase will be offset on the consumer with rising prices, as we have seen over the years. According to the Bureau of Labor Statistics’ October 2023 report, fast-food prices have increased 6.2% in 2023, and 13% in 2022 according to Pricelisto, an organization tracking fast food menu prices. According to the Business Insider, article bya Nancy Luna, September 20, 2023, corporate changes such as McDonalds, Chipotle, Chick-fil-A, and other franchise groups fought this law siting the increase could raise cost for fast-food restaurants by $3 billion. According to Ana Altchek, Dominick Reuter with Business Insider, companies like McDonald’s, Chipotle, Jack In the Box have planned for a $250,000 extra annual cost and do plan to rise menu prices in their California stores.
For some companies, the language in the law is being scrutinized, most importantly the word, “produces” as it appears in the law and company Panera is arguing they are exempt. According to Business Insider, the fast-food legislation, “does not include quick-service restaurants that make and sell their own bread.” As of recent, per Ana Altchek, Dominick Reuter with Business Insider California’s Governor, Gavin Newsom is arguing Panera is not exempt from this increase despite the relationship between Gov Newsom and the Panera Restaurant owner, Greg Flynn. Flynn has since confirmed he will increase the minimum wage to $20.00 for his workers to keep up with market value wages to attract and retain employees.
On the employee front, while a $4.00 increase is championed, there is great concern that this increase will impact the number of workers being replaced by AI and machines in addition to possibility of reduced hours.
The impact of the minimum wage set for the fast-food industry will be felt by all. Although the rate increase will be seen in a positive light for those in the fast-food industry, the effects of this increase relative to cost will be shared across the spectrum. There will continue to be threat upon workers in this industry with a possible reduction of hours offset with AI and automated machines. The rate increase will impact small businesses regardless of industry most as they need to comply with state & federal law and attract/retain top talent. As we progress closer to April and months following, I would suspect more opinions & data regarding the living wage and the impacts for all workers and companies alike.
Lindsey Aherne, Director of HR Operations at Amerit
