Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Wednesday, August 28, 2024
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

California fast-food workers got a raise thanks to Gavin Newsom’s minimum-wage law

April 1, 2024
in Business
Reading Time: 4 mins read
A A
California fast-food workers got a raise thanks to Gavin Newsom’s minimum-wage law
0
SHARES
ShareShareShareShareShare

California fast-food workers got a raise thanks to Gavin Newsom’s minimum-wage law

Over half a million fast-food workers in California are getting a hefty pay raise thanks to the state’s minimum wage law that went into effect Monday.

READ ALSO

Temu founder Colin Huang is no longer China’s richest man

Big Tech wants to keep stealing patents—so it’s going to war with Big Pharma

California Gov. Gavin Newsom signed the minimum-wage legislation into law last September, increasing wages from the state wage of $16, a 25% bump. Assembly Bill 1228, which applies to franchises with over 60 locations, has an exception for bakeries. Its passage also formed the Fast Food Council, which will establish rules and regulations for the industry.

The effects of the minimum-wage mandate will ripple outwards to small business owners, too. California already has the country’s highest unemployment rate—5.3%, compared to the national average of 3.9%—and slow job growth will exert pressure on other sectors to make their pay more competitive.

“I think we are going to see spillover effects within food service, but beyond that, we should expect to see spillover effects to other industries that are competing for this talent,” Daniel Zhao, lead economist for career site Glassdoor, told CNBC.

Though about half-a-million workers will rejoice at a pay raise, the mandate has raised concerns about increased operating costs that could impact hours for workers and the price of menu items. Some fast-food franchisees don’t believe California’s new law is worth celebrating.

‘We’re not a corporate store with deep pockets’

The California law’s passage means fast-food franchises will have to manage increased operating costs and strike a balance between raising prices and cutting workers.

Brian Hom, who owns two locations of Vitality Bowls in San Jose, said the minimum-wage mandate will cost him $100,000 across both of his stores. To offset wage increases, he’s increased store prices by 5-10% and has stopped hiring new employees. Depending on the future of the business, he may consider cutting down shifts from three to four employees down to two—or, if things get bad, laying off workers.

“I’m all for increasing wages,” Hom said. “But I’m concerned with small businesses like myself being able to sustain keeping the business open.”

Hom said his stores are not corporate, and that he employs his wife, sons, and daughter-in-law. He added that many owners are people of color and immigrants who poured money into their franchises for their livelihood.

“I invested substantial money out of my retirement funds to open new businesses,” he said. “We’re not a corporate store with deep pockets.”

Other franchises have made similar concessions. Pizza Hut laid off over 1,000 delivery drivers ahead of the law’s passage, but this was also due to industry change favoring transitions to third-party delivery services. Chipotle also intends to increase prices to offset increased operation costs.

“We know we have to take something as a significant increase when you talk about a 20%-ish increase in wages,” Jack Hartung, Chipotle’s chief financial and administrative officer, said in its fourth-quarter earnings presentation. “We haven’t made a final decision, in terms of pricing. We’ll wait and see just what the landscape looks like, what the consumer sentiment is, what other companies are going to do.”

Laurie Schalow, Chipotle’s chief corporate affairs officer, told Business Insider that Chipotle anticipates a mid-single-digit price increase after the law’s implementation.

‘They’ve already developed this buffer’

Alí Bustamante, deputy director of Worker Power and Economic Security at the Roosevelt Institute, isn’t convinced fast-food companies need to go through these concerted efforts to increase prices.

“California businesses can absorb this increase in the minimum wage without increasing prices and without having to impact employment in any kind of negative way,” he said in a Monday press conference.

Fast-food companies have been marking up prices for about a decade, Bustamante argued, and doing so at a much higher rate than other industries. A March Roosevelt Institute report found fast-food prices increased 46.8% from 2014 to 2023, compared to a 28.7% average overall price increase of goods. The report also found that in 2023, the 10 largest publicly traded fast-food companies spent $6.1 billion on share buyback to return money to investors. Roosevelt Institute calculated the cost to increase wages for all fast-food workers in the state would be, at a maximum, $4.6 billion. 

The minimum-wage bump likely won’t be as dramatic as fast-food companies think: Minimum wage in some California cities is already higher than the state-mandated $16. The minimum wage in Los Angeles is $16.90 per hour; in San Francisco, it’s $18.07. This means many workers in those parts of the state won’t experience the 25% wage hike. According to the Institute for Research on Labor and Employment at the University of California at Berkeley, about one-third of minimum-wage jobs in California are already earning more than the state’s $16 per hour.

Not only will the law not impact fast-food companies to the full expected extent, Bustamante said, but fast-food companies are already adept at increasing profit margins, making it unnecessary for them to take additional measures to pass off increased operating costs to their employees.

“They’ve already developed this buffer,” Bustamante said. “They’ve already basically developed these unnecessary price hikes in the past that allow them to now either be able to actually absorb higher operating costs without actually necessitating increases in prices or impacting labor in any negative way.”

Subscribe to the new Fortune CEO Weekly Europe newsletter to get corner office insights on the biggest business stories in Europe. Sign up for free.

Credit: Source link

ShareTweetSendSharePin
Previous Post

Amazon’s long journey to get rid of its signature brown boxes

Next Post

Why this NC State team is a bigger Cinderella than the 1983 champs

Related Posts

Temu founder Colin Huang is no longer China’s richest man
Business

Temu founder Colin Huang is no longer China’s richest man

August 28, 2024
Big Tech wants to keep stealing patents—so it’s going to war with Big Pharma
Business

Big Tech wants to keep stealing patents—so it’s going to war with Big Pharma

August 28, 2024
Lego has a historic half-year launching 300 new sets, opening 41 stores
Business

Lego has a historic half-year launching 300 new sets, opening 41 stores

August 28, 2024
What does Pavel Durov’s arrest mean for his tech legacy?
Business

What does Pavel Durov’s arrest mean for his tech legacy?

August 28, 2024
Lowe’s followed Tractor Supply, Harley Davidson and John Deere in backing off DEI initiatives
Business

Lowe’s followed Tractor Supply, Harley Davidson and John Deere in backing off DEI initiatives

August 28, 2024
Gen Z tackles frustrating job market
Business

Gen Z tackles frustrating job market

August 28, 2024
Next Post
Why this NC State team is a bigger Cinderella than the 1983 champs

Why this NC State team is a bigger Cinderella than the 1983 champs

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Intel has hired Morgan Stanley to defend against activists: sources

Intel has hired Morgan Stanley to defend against activists: sources

August 24, 2024
Travel to Paris dropped because of the Summer Olympic Games

Travel to Paris dropped because of the Summer Olympic Games

July 28, 2024
Paramount+ annual subscriptions are half off right now

Paramount+ annual subscriptions are half off right now

August 20, 2024
Telegram founder’s arrest was over ‘lack of moderation’ but Macron says it wasn’t political

Telegram founder’s arrest was over ‘lack of moderation’ but Macron says it wasn’t political

August 26, 2024
Recession indicator now slows the economy, creator says

Recession indicator now slows the economy, creator says

August 18, 2024
Apple’s latest iOS 18 beta walks back some changes to the redesigned Photos app

Apple’s latest iOS 18 beta walks back some changes to the redesigned Photos app

August 5, 2024
Apple Intelligence may not arrive with iOS 18

Apple Intelligence may not arrive with iOS 18

July 29, 2024

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • Jets add Brenden Bates, lose Shemar Bartholomew in waiver moves
  • Temu founder Colin Huang is no longer China’s richest man
  • Buffett’s Berkshire Hathaway hits $1 trillion market value, first U.S. company outside of tech to do so
  • Watch out, there’s a new AI pin in town that can transcribe all your conversations

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In