The minimum wage will increase by 25%, from $16 to $20. This presents a big problem to thousands of California restaurant operations.
To cover this cost, numerous fast-food restaurants have decided to boost menu pricing. This move is critical for their survival despite the fact that consumers have not responded positively to it.
McDonald’s has made news in recent months for its primary price rises. The Big Mac combo, previously a cheap supper option, now costs $18 in California!
As costs have risen, low-income customers are finding it difficult to afford their favorite fast-food items. Due to the high prices, many people are now forced to limit their fast-food consumption.
ALSO READ: California Fast Food Workers Are Losing Their Jobs As Minimum Wage Law Take Effect
Fast food corporations such as McDonald’s, Popeyes and Pizza Hut are now laying off employees to deal with the increasing minimum wage. Pizza Hut has previously revealed plans to lay off over 1,200 staff.
This method reflects the difficulties these businesses experience in adapting to the new pay requirements. Other companies, such as El Pollo Loco, are reducing labor expenses by automating specific operations, such as salsa-making procedures. However, these changes have a substantial consequence: increased unemployment rates.
California Governor Gavin Newsom has attracted criticism for signing the minimum wage legislation. Business owners, consumers, and right-wing politicians have all expressed their opposition to the measure. They share the same concern: the weight eventually falls on consumers as restaurants are forced to hike prices to meet costs.
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Newsom defends the plan against criticism, referring to the increase as a compromise. Tia Orr, executive director of the Service Employees International Union California, praises the legislation as “a transformational step toward an economy that works for all, not just billionaires.”
She explained that raising the minimum wage, whether at the state or federal level, will result in some layoffs. However, due to the legislation, more than half a million fast-food employees now earn a more decent salary.
As the bill takes effect this spring, experts wonder if restaurant operators would continue to lay off employees and raise menu pricing. Also, California’s unemployment rate is 5.3%, compared to 4.5% last year. This increases the uncertainty about how the minimum wage rise will affect the job market and consumer pricing.
ALSO READ: California Governor Signs Bill That May Affect the State’s Fast Food Industry
One netizen said, “This is not about minimum wage! This is about fast-food employers’ practices of hiring illegal migrants far below (the United States federal minimum wage of $7.25) at $3.25 an hour. When the migrants complain, they are told to go back to work, or they will be reported to ICE.”
Another added, “A newly hired fast food worker in Cali makes way more money than a first-year teacher in Missouri. The teacher who went to the University of Missouri spent ~$14,000 a year on tuition and fees plus about $16,000 a year for shelter and dining for a total of $120,000 over the four-year period he spent studying, attending classes, and preparing for the role of classroom teacher in K-12 schools in the heart of our country. Annual salary is ~$32,900. Fast food workers make $40,000 with a high school diploma. Somethin’ ain’t right!”
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