MassLive | Increase in minimum wage means higher prices for customers, fewer hours for staff @MassLive | Uploaded July 2024 | Updated October 2024, 1 week ago.
Fast food restaurant owners are scrambling to absorb a dramatic jump in labor costs after a new California law boosted the hourly wage for fast food workers on April 1 from $16 to $20 an hour.
Experts say it’s still too early to tell the long-term impact of the wage hike on fast food restaurants and whether there will be widespread layoffs and closures. Past wage increases have not necessarily led to job losses.
When California and New York nearly doubled their minimum wage previously to $15 compared to the federal level of $7.25 per hour, job growth continued, according to a University of California, Berkeley study.
So far, the industry has continued to show job growth. In the first two months after the law passed April 1, the industry gained 8,000 jobs, compared to the same period in 2023, according to the U.S. Bureau of Labor Statistics. No figures were available yet for June.
But many major fast food chain operators say they are cutting hours and raising prices to stay in business.
"So we basically had to raise our prices about 10% in April due to the increase of minimum wage," said Juancarlos Chacon, an owner of nine Jersey Mike’s in Los Angeles, said.
A turkey sub for under $10? It’s now $11.15. While customers are still coming in, he’s seeing them cut back — no drinks, no chips, no dessert.
Since their core business is lunch, Chacon has been reducing staffing in the mornings and evenings. He’s also cut a few part-time employees, going from 165 total to about 145.
It wasn’t only entry-level workers that got a pay raise. Shift leaders, assistant managers, and everyone else up the ladder had to get raises too, and labor represents about 35% of his costs.
Gov. Gavin Newsom said the hike was necessary to give the state’s more than half a million fast food workers a living wage.
Fast food restaurant owners are scrambling to absorb a dramatic jump in labor costs after a new California law boosted the hourly wage for fast food workers on April 1 from $16 to $20 an hour.
Experts say it’s still too early to tell the long-term impact of the wage hike on fast food restaurants and whether there will be widespread layoffs and closures. Past wage increases have not necessarily led to job losses.
When California and New York nearly doubled their minimum wage previously to $15 compared to the federal level of $7.25 per hour, job growth continued, according to a University of California, Berkeley study.
So far, the industry has continued to show job growth. In the first two months after the law passed April 1, the industry gained 8,000 jobs, compared to the same period in 2023, according to the U.S. Bureau of Labor Statistics. No figures were available yet for June.
But many major fast food chain operators say they are cutting hours and raising prices to stay in business.
"So we basically had to raise our prices about 10% in April due to the increase of minimum wage," said Juancarlos Chacon, an owner of nine Jersey Mike’s in Los Angeles, said.
A turkey sub for under $10? It’s now $11.15. While customers are still coming in, he’s seeing them cut back — no drinks, no chips, no dessert.
Since their core business is lunch, Chacon has been reducing staffing in the mornings and evenings. He’s also cut a few part-time employees, going from 165 total to about 145.
It wasn’t only entry-level workers that got a pay raise. Shift leaders, assistant managers, and everyone else up the ladder had to get raises too, and labor represents about 35% of his costs.
Gov. Gavin Newsom said the hike was necessary to give the state’s more than half a million fast food workers a living wage.
