Fast Food Minimum Wage in California: Economic Impact and Job Competition

Economic Viability and Local Regulations

A new minimum wage for fast-food employees is about to be implemented in California and is scheduled to go into effect on April 1. This modification is the result of a bill that was overwhelmingly backed by unions and signed into law by Governor Gavin Newsom last fall. After discussions, the final fee came down to $20 per hour from the $22 per hour that was originally requested.

Critics on the right have voiced concern, predicting an economic collapse and absurdly expensive fast food pricing. However, a 2016 law gradually increased the minimum wage to $15 per hour, with increments made to account for inflation; as a result, the current minimum wage in California is $16 per hour. The new minimum pay for employees in the fast food business will also be adjusted annually to account for inflation to guarantee its sustainability.

There has been a fierce rivalry for jobs in the food business despite the pandemic slump. Raising salaries is viewed as a tactic to draw in more workers because California opposes expanding the use of child labor.

California’s economy has survived the introduction of the $15 minimum wage in 2018, despite ongoing issues including the lack of affordable housing. In California, several local governments already impose minimum salaries that are greater than the legal minimum.

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Potential Impacts on Other Industries and the Establishment of the Fast Food Council

Though the impact on sit-down restaurants is yet unknown, the pay hike for fast food employees may result in wage increases in other businesses, especially those employing hourly employees like convenience shops. Raises for “back of house” employees are a possibility, as is the introduction of tip-sharing between restaurants and kitchen personnel.

The wage hike is considered a victory for labor, as unions successfully persuaded fast food companies to drop a proposed referendum that aimed to roll back the wage increase. In exchange, the Legislature agreed not to vote on a bill holding fast-food companies accountable for labor-law violations by their franchisees.

Moreover, the new law establishes a “Fast Food Council,” comprising representatives from both labor and management, to address safety and health regulations in the sector. While unionization of fast food restaurants is not mandated by the law, union leaders anticipate that the council’s formation will increase the likelihood of unionization.

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