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Critics say California fast food wage increase has had negative impact on businesses, puts them in danger

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California Gov. Gavin Newsom’s recent push to increase the minimum wage for fast food workers in the state has had a detrimental impact on businesses, leading to job cuts and price increases at major chains like Chipotle and McDonald’s. The new wage law, which went into effect on April 1, requires fast food restaurants with at least 60 locations nationwide to pay workers $20 per hour, excluding those that make and sell their own bread.

Since the law was signed last year, nearly 10,000 jobs have been cut across fast food restaurants, according to the California Business and Industrial Alliance (CABIA). To highlight the unintended consequences of the legislation, CABIA has taken out ads in newspapers featuring mock “obituaries” of popular fast food brands that have been forced to raise prices, lay off workers, and even close stores to stay afloat. This has led to nearly 80% of Americans now considering fast food a luxury due to the high prices.

CABIA president Tom Manzo criticized the law, stating that it puts businesses in further jeopardy and will ultimately lead to more job losses and automation in the industry. He noted that some restaurants have already cut employee hours in order to comply with the wage increase. In anticipation of the higher labor costs, some fast food owners began letting go of workers before the law went into effect, including the Southern California Pizza Co., which laid off around 841 delivery drivers in December 2023.

The increase in the minimum wage comes at a time when inflation has resulted in higher prices for fast food items, further exacerbating the financial strain on consumers. A recent survey found that 78% of consumers now view fast food as a luxury purchase due to the rising costs. Critics of the wage hike argue that fast food jobs were meant to be entry-level positions for young workers to gain work ethic and skills, not long-term careers.

Despite the intentions of the law to provide fast food workers with better wages and working conditions, critics like Manzo believe that drastic wage increases will ultimately hurt businesses and workers in the long run. With businesses already struggling to survive under the weight of rising costs, the future of the fast food industry in California remains uncertain. Newsom’s office has yet to comment on the concerns raised by critics of the minimum wage increase.

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