(Headline USA) Most fast-food workers in California will be paid at least $20 an hour beginning Monday when a new law is scheduled to kick in threatening to raise prices in a state already infamous for its high cost of living.
Democrats in the state Legislature passed the law last year.
The law was supported by the trade association representing fast food franchise owners. But since it passed, many franchise owners have bemoaned the impact the law is having on them, especially during California’s slowing economy.
Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. He said sales have 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 anywhere from 5% to 15% at his stores, and is no longer hiring or seeking to open new locations in California, he said.
“I try to do right by my employees. I pay them as much as I can. But this law is really hitting our operations hard,” Johnson said.
“I have to consider selling and even closing my business,” he said. “The profit margin has become too slim when you factor in all the other expenses that are also going up.”
Pizza Hut franchisees reported that the law will force them to lay off more than 1,200 drivers.
Over the past decade, California has doubled its minimum wage for most workers to $16 per hour.
The law applies to restaurants offering limited or no table service and which are part of a national chain with at least 60 establishments nationwide.
Restaurants operating inside a grocery establishment are exempt, as are restaurants producing and selling bread as a stand-alone menu item.
Adapted from reporting by the Associated Press
