California fast-food workers are getting a pay boost on April 1 that is coming with some unintended consequences.
After the state legislature approved a law hiking the minimum wage for fast-food workers to $20 an hour, some companies have warned their employees that they will be scheduled for fewer hours as a result of the wage increase. The bill, which increases wages for fast-food companies with more than 60 locations nationwide, has put some managers of these chains in a tricky position.
“I am used to being a champion of labor, and I’m in this odd position,” Michaela Mendelsohn, who manages six El Pollo Loco restaurants and oversees more than 170 employees, told NPR. “We’re having to get more efficient. So really, what’s left is … to reduce labor hours. And I hate saying that.”
Many employees will receive a 25% wage increase as a result of the new law. California is one of the most expensive states in the country to live in. And more than half of its employees work in the fast-food industry.
“It’s super great,” said Sandra Jauregui, who will see a $120 increase in her paycheck as a result of the bill. “At the very least, it’ll give me some breathing room … and make it easier to pay the rent and other bills.”
She is, however, worried about her co-workers who could see their hours cut.
“My boss told me that he won’t reduce my hours but that he will cut others’ hours,” Jauregui said.
Some restaurants have already warned that price hikes are likely to affect customers as well. Jack in the Box, Starbucks, McDonald’s, and Chipotle said prices could go up 2.5% to 3.5%. Pizza Hut said the wage increase was the cause of the company warning nearly 1,000 employees they could lose their jobs.
“This policy is going to be really different in different parts of California,” said Jacob Vigdor, a University of Washington professor who studied a similar wage increase in Seattle.
Vigdor’s research on the increase from $9.47 to $13 an hour in Washington didn’t have much of an impact on the number of jobs available but did find that workers lost hours.
“The restaurant business is a really tough business,” Vigdor said. “Restaurants open and close all the time, even in places where the minimum wage hasn’t changed for more than a decade.”
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The bill was previously at the center of a controversy involving Panera Bread. Gov. Gavin Newsom (D-CA) came under fire following reports the chain was not going to have to increase its pay for employees due to an exemption in the bill for companies that bake their own bread on-site.
The loophole appeared to be a favor for Glenn Flynn, who owns dozens of Panera Bread locations in California and has donated $220,000 to Newsom’s campaigns since 2017.
