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Starting Today: Fast Food Workers In California Will Earn $20 An Hour

minimum wage sign

The fast food industry in California is undergoing a significant change today (April 1st, 2024). That’s because a new law comes into effect, guaranteeing fast food workers a minimum wage of $20 per hour.

(This post may contain affiliate links. Please read my disclosure policy).

Fast Food Workers Minimum Wage: Why $20 An Hour?

This move aims to provide more financial security to a profession historically known for low wages. But it raises concerns about the potential impact on prices and the franchise businesses operating in the fast food space.

On Improving Financial Security

By raising the minimum wage to $20, California’s lawmakers aim to acknowledge the reality that many fast food workers are adults supporting their families rather than teenagers earning extra spending money. This increase will undoubtedly enhance the financial well-being of these workers (a bit), offering them the means to meet their basic needs and potentially reduce their reliance on multiple jobs.

This Means Challenges for Fast Food Franchisees

Franchise industry lobbyists say the increased wages will result in additional costs, making it necessary for franchisees to consider raising prices by 5% to 15% and potentially halt expansion plans.

But do you need to feel sorry for franchisees?

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I don’t know if “sorry” is the right word to use, but California franchisees will undoubtedly need to raise their prices. How much?

They’ll need to find the right balance between covering their now higher payroll costs and keeping their customers coming in. And that’s going to be challenging, especially because as of this writing, food prices continue to be out of control.

Employment Effects and Potential Positive Outcomes

According to The Detroit News, California has gradually increased its minimum wage over the past decade, raising concerns about potential job losses. However, data suggests that previous increases did not lead to significant employment reductions.

And according to Michael Reich, a labor economics professor at the University of California-Berkeley, wages have been positive employment effects with these higher wages. Plus, many larger cities in California already have higher minimum wage rates, meaning the jump to $20 per hour will be less dramatic for some fast food restaurants.

To conclude, it’s much too early to determine how much the new $20 per hour minimum wage will effect fast food workers and establishments. We’re just guessing here. But there will be an impact.

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franchise article written by joel libava
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joel libava

I'm The Franchise King®, Joel Libava. I help prospective franchise owners avoid bank account emptying mistakes.
For 23 years, I’ve been showing people how to make smart, informed decisions on franchises to buy, and I can help you, too!
P.S. I'm not a franchise consultant/broker.

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There are many people in the franchise business who claim to to be experts in the field. Unfortunately many of them lack both knowledge and integrity. Joel, however, is without question one of the most qualified and principled people I know, in or out of his industry."
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