Fast Food Council Approves Motion To Possibly Raise State Fast Food Minimum Wage By Another 70 Cents

The California Fast Food Council approved a motion to consider raising the minimum wage for fast food workers by another 70 cents per hour on Wednesday, with a vote on the matter expected at their next meeting in either April or May.

The fast food wage in California shot up dramatically in April 2024 following the passing and signing of AB 1228 in late 2023. Tied to the state minimum wage of $16 an hour, the new minimum wage was set to $20 an hour.

The entire fast food industry began to struggle as a result. Some, like Chipotle and McDonalds, raised prices. Others invested in automated kiosks and other automated devices to help reduce the number of employees. Some stores outright closed, including most Rubio’s Coastal Grill locations in California. Worst yet, layoffs swiftly went into the thousands.

But things grew worse. In June, a Hoover Institute at Stanford University study cited by the California Business and Industrial Alliance found that thousands of fast food jobs were lost as a result of AB 1228, something which the Newsom administration publicly and vehemently deny for months. By July, a new survey found that 74% of California fast-food restaurant owners said that “there is an increase in the likelihood of shutting their restaurants down.”

Amid all of this, labor unions were actually calling for a raise to $20.70 per hour for fast food employees in August.

Governor Newsom and other state officials finally began to accept that the raise caused massive job losses following independent, federal reports by the the Bureau of Labor Statistics showing that the state lost 5,416 fast food jobs since January 2024 and over 6,000 since September 2023 – more than 10,000 jobs lost. While Newsom and others in his administration tried to spin the numbers before the statistics were released, they failed. This was only heightened in November when it was found out that UC Berkeley downplayed the negative effects of the AB 1228 law earlier in the year.

Voters also rejected Prop 32 in November, which would have raised the state minimum wage to $18 an hour, largely because of the high number of job losses caused by AB 1228. And just this week, the SEIU themselves admitted that over 10,000 fast food jobs in California were lost in the past year because of the law.

A push for yet another wage increase

Despite all of this, unions continued to push for that 70 cents per hour increase, citing a need for a 3.5% cost of living increase. The continued pushing against a growing force against AB 1228 led to Wednesday, when the Fast Food Council announced that a vote on the 70 cents increase would come at their next meeting.

Restaurant owners and workers clashed before the Council’s decision. Owners said that raised prices, employee firings, cut hours, increased food prices and the growing automation of the industry have been a direct result of the raise, which is not even a year old yet. Should it go up another 70 cents, it could lead to more of the same. And with consumers fed up over the higher prices, businesses are set up to suffer even more.

“We haven’t recovered yet from the hike of four dollars per hour last year,” one KFC franchisee owner told the Globe. “It was the wage increase and the higher costs of everything that caused us to raise prices. And we don’t like to. This isn’t a greed thing. This is a staying afloat thing. We cannot afford another increase right now.

“You know the crazy thing? Workers are still saying they can’t afford to live on these wages, but we had to cut their hours to not go out of business. That’s the problem. It’s losing shift hours, not the wage. The Council needs to give us time to adjust and we need more studies showing just exactly what the wage increase did. Once things settle down and we give workers more hours back, then we can discuss more options.”

However, for workers, inflation and rising prices of everything from rent to food have caused them to get more desperate. With their $20 per hour wages not covering everything

Restaurant operators pleaded for the council to hold off on further increases, with many saying they have been forced to raise menu prices, eliminate positions or cut hours for their workers after the minimum wage for fast-food workers increased 25% to $20 per hour last April.

Workers, meanwhile, shared how they were struggling to keep up with inflation, citing increases in grocery prices, rent and other costs.

“The cost of my rent and my medicine has gone up,” said Veronica Gonzales, a fast food worker, at the meeting on Wednesday. “I cannot live with this wage.”

Both sides are now awaiting the Council’s next meeting, which is to be in either April or May. Already, owners are preparing for the worst, meaning possible higher prices or even more layoffs on the horizon.

“We don’t have many options,” added the KFC franchisee on Thursday. “Ever since AB 1228 was signed, we have had to decide between hurting our customers more or hurting our employees more. This would never have happened if AB 1228 failed.”