California’s $20 Hour Wage Hike Leads To 10,000 Job Losses, Report

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California had more than 540,000 fast food workers, according to 2022 reports, but a $20 wage hike reportedly left 10,000 people unemployed. The controversial  AB 1228 law that went into effect on April 1 was championed as a victory for workers, but as predicted, it came with many side effects, 

Initial layoffs 


In December 2023, around 1200 drivers were fired by Pizza Hut franchises. The fast-food chains warned the Golden State residents of dire consequences months before the bill went into effect, and some of these included firings, rising prices, cutting hours, and switching to self-serving kiosks. 

Grim reality 


Some wondered whether a 25 percent increase was worth it since many workers lost their jobs before the raise. Others raised concerns about the price increases. Some restaurants have increased prices by as much as 8% since the beginning of April. 

Customers had their say

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Some fast-food customers were not pleased with the price increases, so they chose to support local, independent eateries. A McDonald’s fan, Greg LaVay, switched to a sit-down restaurant where a burger is still $2.50 instead of $5.39 for a Big Mac. Similar trends were noticed among Starbucks and Chipotle customers. 

Newsom was not concerned 

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California Governor Gavin Newsom initially dismissed talks about price increases. Speaking to The Journal in early May, a spokesperson for the Governor said that the wage hike was aimed at providing necessities, adding that fast food chains could afford it. 

Some small businesses were affected


While the wage hike impacted most fast food workers and, consequently, their bosses, there are exempts. The bill is aimed at restaurants consisting of more than 60 establishments nationally. Yet, some small business owners were impacted since they were franchisees. That’s why they were forced to close their doors or continue working with marginal profits. 

Self-serving kiosks

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While self-serving kiosks were already planned for the upcoming years, the wage hike only accelerated the process for some franchisees. Harshraj Ghai, the owner of 180 franchisees in the Golden State, told Business Insider that the rollout of kiosks was initially supposed to happen in five to ten years. Now, he is considering introducing them in all 140 Burger King locations he owns. 

Reports of 10,000 people losing jobs


On April 24, 2024, Hoover Institution revealed that 10,000 jobs were lost due to the 25 percent wage hike. The article also quoted Scott Rodrick, a Northern California McDonald’s franchisee, saying he could not charge $20 for a Happy Meal. The organization noted that the wage hike impacted primarily teens and young adults since they represent around 60 percent of fast food workers. 

Other workers want wage increases


San Diego hotel workers gathered on May 1 and asked for $25 per hour. Janitors and event center workers joined them in an effort to request the San Diego City Council to pass an ordinance explaining that tourism has recovered since the pandemic, and businesses can afford higher wages. 

Delayed increases for healthcare workers 


While the wage increase for healthcare workers was supposed to start on June 1, it was delayed on May 31. However, according to the Governor’s office, the delay was only one month, meaning a gradual increase toward $25 should begin on July 1. The reasons for the delay were reported to be a significant budget shortfall.

The Seattle experience

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Seattle passed a minimum wage law that raised the state’s minimum wage from $9.47 to $15 in 2014. While it had been life-changing for many workers, a 2017 University of Washington study concluded that hours worked declined, resulting in less pay for low-wage workers for some employees. 

Other reports


The University of California, Berkeley, study found that the wage hikes increased pay and have not led to job losses. For business, the results were mixed; the Washington Policy Center found that businesses stopped hiring workers without profitable experience, while others reduced the number of employees.

Increased employment in California and New York?


California and New York have doubled minimum wages in the past decade. A study found that the higher minimum wage in those states actually increased employment in the fast-food sector. Economists from the University of Victoria, UC Berkeley, and UC Davis conducted the study. 

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Kate Smith, a self-proclaimed word nerd who relishes the power of language to inform, entertain, and inspire. Kate's passion for sharing knowledge and sparking meaningful conversations fuels her every word.