California’s new $20 minimum wage for most fast food restaurants took effect April 1. It jumped $4.50, or 19 percent, from $15.50 on Dec. 31. This increase certainly helps the 500,000 workers who will receive a pay increase – those who will keep their jobs. . Some early reports released Monday show businesses are being hit by rising costs.
Keith Miller, Subway franchise owner said NBC 7 San Diego, “You keep wondering when you’re going to break the camel’s back?”
“We need to become more efficient,” says Michaela Mendelsohn, who manages 170 employees at El Pollo Loco. said NPR. “So really, what’s left to do is…reduce working hours.” And I hate saying that.
The 19% increase is “unprecedented to my knowledge,” Raymond Sfeir, director of the A. Gary Anderson Center for Economic Research at Chapman University, told us. He warned the increase would lead to layoffs, higher prices for consumers, increased use of technology such as automatic hamburger flippers and restaurant closures.
“What is unfortunate is that many franchisees are small operators and not owners of dozens or even hundreds of restaurants,” he warned. They are small capitalists who are at the heart of the local economy, contributing to charities and sponsoring little league events.
edCalifornia’s unemployment rate for February was 5.3%, the highest of any state. Sfeir speculated that the wage increase could eliminate 3% of jobs in the “limited service restaurants and other food service establishments” sector, which includes fast food restaurants. That would add about 0.12 percentage points to the state’s unemployment rate, bringing the total to 5.42 percent.
We won’t know the full effect for several months as higher wages become apparent. But rising consumer prices add to overall inflation over the past four years. February consumer price index jumped up 3.2% compared to the previous year, still above the 2% considered reasonable. This adds to the sticker shock consumers are still suffering from. prices increase 7% in 2021, 6.5% in 2022 and 3.4% in 2023.
Costs pile up like spoiled ketchup on a rancid hamburger patty.
California Daily Newspapers
