Source: AFP
The minimum wage for many fast food workers in California rose to $20 an hour on Monday, prompting cheers from workers but warnings of potential price hikes in a state already struggling with a high cost of living.
Staff flipping burgers or making tacos at chain restaurants will now be guaranteed one of the highest base rates in the country.
“It’s going to help me breathe a little easier in terms of paying my rent and even buying groceries,” said Angelica Hernandez, who works at a McDonald’s in Los Angeles.
“In all the 19 years I’ve been in this industry … maybe 25 cents would be the most we’d get a year if we were ‘good workers,’ so that’s a huge raise.”
More than half a million people in California are employed in the fast food industry, at global chains like Burger King and Taco Bell, but also smaller domestic brands like In-N-Out Burger.
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Tia Koonse of the University of California, Los Angeles said the vast majority of workers in the industry are women and people of color, with an industry-wide average annual salary of $25,800 — well below the $43,000 average.
“There’s a common misconception that fast food workers are teenagers working for pocket change or the latest iPad or whatever,” he told reporters.
“But the truth is that more than half are over 25… and a quarter are actually the main earners in their home.”
Raising the minimum wage from $16 an hour will go some way to improving the lives of people who are disproportionately likely to fall below the official poverty line, he said.
The California legislation, which was signed last year by Democratic Gov. Gavin Newsom, applies only to establishments with little or no table service and that have at least 60 locations statewide.
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Some chains have said they will need to raise prices and warn that the wage increases could ultimately cost jobs.
“Everybody is going to have to pay more,” said Jack Hartung, Chipotle Mexican Grill’s chief financial officer, according to the Wall Street Journal.
“Layoffs”
Chipotle, which is based in California, has already raised its prices four times in the past two years and says it is considering further increases of up to nine percent to cover wage increases.
Alexander Johnson — who manages a number of franchises of Cinnabon bakeries and Auntie Anne’s, a pretzel chain, in the San Francisco Bay Area — told ABC7 he was considering layoffs and higher prices to cover the 470,000 cost increase dollars.
“It means we have to raise prices, which we don’t want to do,” he said.
Economists are divided on the effects of the minimum wage, which is set at $7.25 federally, though it varies widely by state.
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A recent study by the Congressional Budget Office found that raising the federal minimum to $17 an hour could help 18 million people over the next five years, but could cost 700,000 jobs.
UCLA’s Koonse argued that the California layoffs were both unlikely and unnecessary.
“California has added 142,000 fast-food jobs since the minimum wage began increasing in 2015,” he said.
Stores in some of the state’s most expensive cities already pay staff as much as $20 an hour, either because of local rules or market forces, he said, adding that the industry’s big names have posted record profits since 2018. fueled further by the pandemic.
“Surely instead of layoffs, they can share some of those profits with the poorest workers in California.”
Source: AFP