Instead of jubilation, Gov. Gavin Newsom’s impending $20 fast food minimum wage hike is continuing to attract scrutiny, as a procession of companies warn of layoffs and increased prices on the heels of accusations the law offered carveouts for a wealthy donor.
Starting April 1, employees of most fast food establishments will see a substantial wage increase as a $20 minimum wage takes effect, but it doesn’t spell good news for everyone, as several fast food executives warn they will raise prices and lay off workers.
In some places, workers can expect up to a 22% pay raise from the statewide minimum wage of $16 an hour. Though many cities and counties have implemented minimum wages above the state minimum, the vast majority of fast food workers in California earn somewhere between $16 and $17 an hour.
Though minimum wage in California has been steadily climbing over the past decade, the fast food wage increase is notable in its size and scope — expected to impact upwards of half a million people.
More:Fast food workers are losing their jobs in California as new minimum wage law takes effect
“We’re not just about growth, this state is also about inclusion, and that’s the foundational principle we’re advancing here today,” Newsom said at the bill signing event, echoing prior arguments that the increase will help rectify income inequality and disenfranchisement. The hike will impact 557,000 people at 30,000 locations, Newsom said, with 80% of the fast food workforce people of color and two-thirds women.
Some of the state’s fast food companies have announced in recent weeks they are planning for layoffs they say are necessary in order to offset the burden of labor costs. McDonald’s and Chipotle Mexican Grill executives said last year they will raise their menu prices in 2024 to accommodate the law.
However, it will take time before the true number of layoffs is known, as will analysis of whether the increased wages will have their desired effect. The nonpartisan Legislative Analyst’s Office notes labor market effects from minimum wage increases can vary across regions, as many cities and counties have local minimum wages.
The law applies to establishments with 60 or more locations offering little or no table service and primarily engaged in selling food and beverages for immediate consumption. A loophole in the law garnered controversy recently following a February report by Bloomberg News, which suggested an exemption for bakeries and establishments that bake bread on site intentionally benefits Panera Bread’s owner, a former classmate and donor to Newsom.
The governor has refuted the allegations and announced the chain is not exempt from the wage hike, but the controversy came at a perilous time for the governor as his hallmark mental health measure barely passed and the state’s deficit ballooned.
Kathryn Palmer is the California 2024 Elections Fellow for USA TODAY. Reach her at kapalmer@gannett.com and follow her on X @KathrynPlmr.
