As the one-year anniversary of California’s fast food minimum wage approaches, the prospect of yet another pay increase for workers is looming.
The state’s recently created Fast Food Council’s planning subcommittee is scheduled to meet on Wednesday to vote on whether to put a cost-of-living increase on the council’s agenda—a move that requires the opportunity for public comment.
Workers and labor advocacy groups have been loudly pushing for another increase in the fast-food wage, which increased 25% last year to $20 per hour for workers at chains with 60 or more units. The increase went into effect April 1.
Under the bill, the council—made up of a mix of employers and workers—also was given the power to raise pay levels annually by up to 3.5%, to keep up with inflation, as well as addressing working standards and other issues.
Restaurant operators across the state, however, are also speaking up, pleading with the council to hold off on any cost-of-living increases because they are still struggling to absorb last year’s hit to their labor costs.
In a virtual press conference on Tuesday, members of Save Local Restaurants shared their stories, saying the wage hike last year has forced them to cut hours and jobs, even after raising menu prices. Save Local Restaurants is a coalition created by the National Restaurant Association and the International Franchise Association.
Angel Mendez, owner of a Subway unit in the Los Angeles suburb of Burbank, for example, said he has had to cut his staff of 14 people in half to seven, and he’s cut 50 hours out of his payroll. He increased his menu prices about 18% to 20%, he said, but his rent increased 5% along with other operational costs.
“The reality is our small businesses cannot endure more costs,” said Mendez. “I don’t know how much longer I can do this, to be honest.”
Lilly Rocha, president and CEO of the Latino Restaurant Association, said her organization mostly includes small business owners with fewer than 11 units. Restaurant workers have the perception that the fast-food wage is mostly paid by big corporations that can handle increased labor costs, she said. In fact, it has mostly impacted small franchise operators desperately working to keep their doors open.
“There was no foresight considering the small business owners,” she said. “I’ve heard from hundreds of business owners who feel the crush from this minimum wage.”
At a subcommittee meeting in January, member Richard Reinis, a Krispy Kreme franchisee, however, argued that the council doesn’t have enough data on the impact of last year’s minimum wage hike to make any decision about future increases.
Reinis said the council really needs to hear, not only from restaurant operators and workers, but from every state agency that could be financially impacted by another wage increase. That will take time to assess, he said.
Complicating the debate are conflicting studies attempting to color the impact of the fast-food wage as it stands.
Save Local Restaurants on Tuesday sponsored a report by consulting firm Berkeley Research Group that found California lost 10,700 limited-service jobs between June 2023 and June 2024, the steepest decline outside Covid and the Great Recession, citing U.S. Bureau of Labor Statistics data.
Menu prices in California increased 14.5% after the fast-food wage bill was signed in September 2023, nearly double the national average of 8.2%. And restaurants are accelerating their use of automated technology, like kiosks and AI ordering systems, to shrink labor costs as a result.
Another study conducted by the Harvard Kennedy School and the University of California-San Francisco found no evidence that the Fast Food Wage had unintended consequences on staffing, scheduling or wage theft.
The survey of 3,420 fast food workers across the state found that the legislation resulted in hourly wages for fast food workers increasing by at least $2.50 per hour, and the number of workers earning less than $20 per hour declined by about 60 percentage points.
Research from UC Berkeley last year had similar results, reportedly finding that the Fast Food Act did not lead to large job losses or price hikes.
On the other hand, a recent study by Northwestern University’s Workplace Justice Lab found that one in four fast-food workers in Los Angeles were paid below the minimum wage last year—a number that has increased eightfold since 2009.
According to that report, wage theft tripled for fast food workers, from 3% in 2009 to 25% last year.
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