Fast-food workers get raise in California; owners warn of high prices
- Workers at fast-food chains will now make at least $20 an hour
- Advocates say the raise is needed due to the high cost of living
- Business owners claim they have to raise prices or lay off workers
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(NewsNation) — Fast-food workers in California will now get $20 per hour as a minimum wage, but opponents of the law are warning about consequences.
The salary is a $4 increase from the previous statewide minimum wage, and advocates have been applauding the move, but critics say it will lead to higher prices and layoffs.
More than half a million fast-food workers in the state will see the paycheck increase, but business owners are already warning prices will go up.
However, economists say raising prices doesn’t have to be a given. Owners could cut executive pay or shareholder benefits or accept a decline in corporate profits instead of laying off workers or passing the costs onto consumers.
The law covers fast-food chains with more than 60 locations in the U.S., with some of the biggest chains impacted including Chipotle, Starbucks and McDonald’s.
Labor unions have applauded the law raising wages in a state known for its high cost of living. The Service Employees International Union said that California fast-food workers are more than twice as likely to live in poverty and more likely to rely on public assistance due to low wages.
But business owners have said the law will hurt them financially, forcing them to raise prices or let people go.
“A lot of people in the industry are talking about or asking the question: Do I need to cut labor? Do I need to close doors?” said California McDonald’s owner Scott Rodrick. “Do I need to revise hours, you know, I can’t charge $25 for a Happy Meal. So I’m going to have to look at every stone; I’m going to have to unturn every stone on this path of survivability post-April 1. That means getting more efficient with labor efficiencies, making hard choices around capital expenditures.”
Reports say Jack in the Box will raise prices by about 6 to 8%, Chipotle is forecasting a mid-single-digit price increase in California, and McDonald’s has not given a number yet, but the fast food chain already raised menu prices about 10% in the last year.
What isn’t known yet is how these changes could impact consumers outside California.