Starting April 2024, the minimum wage will increase by 25% for California fast food employees. Restaurants with a minimum of 60 locations nationwide will be required to pay employees a $20 hourly rate, an increase of $4 per hour.
Passed last September, the new law AB 1228 impacts over 500,000 of the nation’s fast food employees’ wages and ranks California the highest minimum wage paying state.
Employees applicable to the raise receive an extra $4 an hour. With the average 9-5 daily working schedule and the new $2o wage, employees earn an extra $32 a day and an extra $160 a week.
With such a significant increase in minimum wage, AB 1228 undoubtedly stirs controversy. Supporters claim that increasing the minimum wage boosts employee morale and the economy.
Opponents, including employers and customers, do not want to pay more for the same services and products. Restaurant companies can either choose to keep product prices the same and lose money or raise prices to compensate for the significant amount of money lost through employee pay. Many believe that increasing the prices for the same quality and size of fast food decreases the value of money and results in inflation.
Ella Franklin, a Chick-fil-A crew member, predicts prices will rise by at least $1 and will eat out less herself. She appreciates the extra money, but ultimately believes AB 1228 will have a negative effect considering everyone and all the factors. “The price of things now makes sense for them to increase it because everything is more expensive than it was a while ago,” Franklin said. However, she thinks that retail workers and others in minimum-wage industries will react negatively to the raise.
“[Fast food] will increase by around 5%. Not super great because it’s simply the food and not necessarily the labor,” said sophomore Charlie Sanderson. He encourages other teens to take advantage of the opportunity and plans to work in the industry himself.
Will this benefit the economy or cause more damage? “I think this will make the economy worse because employers are spending more money on their labor and are still receiving the same amount of money and income from the people that are buying their product. Therefore [employer’s] net value will decrease because they have to spend more value on their workers and not take in as much from their product,” says Sanderson. He says that he and California will not buy less fast food.
Overall, Sanderson thinks that this will have a more positive effect on teens looking to make money and the homeless community who are looking for jobs in nonskilled areas, but negative for employers who lose money from labor.
Bryan James, a Certified Public Accountant with 25 years of financial experience, predicts Californians will eat out less, resulting in less money contributed to the economy. He predicts restaurants will increase fast food prices in order to compensate for the additional fees of employees’ wages. “Fast food is traditionally a small margin business, so there’s no room in their margin to absorb that. We’ve got to increase prices to make up for it,” says James.
Is this a good opportunity for teens to make money? “I don’t think so. Those jobs will go to people who have more experience, where traditionally these were starter jobs for
teenagers, but now, there’s going to be less opportunity for them because other people will go ahead and take those jobs instead of them.”
James said AB 1228 would draw back the nation’s economy and result in inflation. “With people making more money artificially, because the government has dictated things, that will create inflation, so prices will go up with everything, instead of letting the market dictate how much employees will be paid,” says James.
Other states may also increase minimum wage to compete with California. In fact, Washington and New York have recently increased their minimum wage. In the future, we can expect other minimum wage jobs to raise employees’ salaries to compete with the fast food industry. To find out more about the minimum wage in the health care industry, please click here.
