Bigger pay for fast food workers, the new state bill, AB 1228, increased the minimum wage in California for most fast food workers, bringing both financial relief and backlash from consumers. The minimum wage for fast food workers increased from $16 an hour to $20 for restaurants that have 60 or more locations globally. However, this pay hike is also causing fast food prices to climb.
The downside to the salary increase is that the owners of many fast-food franchises are raising prices; in order to afford the pay increase, store managers are reducing worker hours or laying off employees altogether. Kalinowski Equity Research, an independent research company that specializes in the restaurant industry, reported that menu prices have increased by 10% in some restaurants.
Economics teacher, Jesse Bustos, teaches his students about the laws of supply and demand in order to provide an understanding of the inner workings of American capitalism.
“What makes it complicated with minimum wage is this idea that’s going to make the prices go up more, and it’s going to make people want less,” Bustos said.
According to The Wall Street Journal, pizzerias are making the most job cuts; two Pizza Hut franchise owners cut 1000 delivery driver jobs and replaced them with gig employees from companies such as Uber and Doordash. These gig employees aren’t employed by the restaurants they work for, so they are not eligible for the minimum wage increase.
Many fast-food restaurants plan to use automated devices, such as self-serve kiosks as a cheaper alternative to paying an employee.
The minimum wage increase will benefit about 900,000 Californians. The benefits of the minimum wage increase will help many who work in the fast food industry better sustain themselves.
According to an article in Forbes magazine, “The Impact of Wages on Employee Productivity”, wage increases may also improve worker productivity in fast food restaurants since many employees will be more motivated to work harder and help with workplace productivity and efficiency. Junior Alonzo Buenrostro who works at Jeffreys Burgers favors the increase in pay.
“The pay increase will help many who need [it] as well as [helping] workers be more motivated,” Buenrostro said.
Although the pay increase is a great way to put more money in the pockets of low-income earners, this wage hike will cause an increase in fast food prices causing customers to pay more and change their eating habits.