On September 11th, the newly established Fast Food Council (FFC) of California held its third meeting. Some franchise owners of fast food businesses urged the council members not to raise the minimum wage to $20.70 per hour by factoring in the inflation rate of 2025. In April of this year, the minimum wage for California’s fast food industry had already been increased from $16 to $20 per hour.
In September 2023, Governor Newsom signed AB1228 to raise the minimum wage for fast food workers to $20 per hour, while this year California’s minimum wage remains at $16 per hour. The bill also required the establishment of FFC, consisting of 9 members appointed by the governor (7 members) and the legislature (2 members), covering representatives from workers and fast food companies/franchise owners. Under the Department of Industrial Relation in California, FFC is tasked with setting wage, health, and safety standards, as well as industry regulations for the fast food sector, with its authority expiring on January 1, 2029.
On July 31st, the California Fast Food Workers Union – a branch of the Service Employees International Union (SEIU) – demanded during the first meeting following the establishment of FFC in California to raise the minimum wage to $20.70 per hour by January 1, 2025 to “keep up with the rising cost of living.”
The union also called for more stable work schedules, mandatory payment of owed wages to employees, and an investigation into the “widespread abuse” in the fast food industry, such as wage theft, harassment, discrimination, and unsafe working conditions.
During this week’s FFC meeting, franchise owners participated via video conference to respond to the union’s wage increase demands, while several fast food managers and employees opposed further pay hikes.
According to a report by CalMatters, restaurant owners mentioned that since the wage increase, they have had to reduce workers’ hours and cut certain benefits. Coping with the cost pressures brought about by the wage hike, despite prices rising, sales have been declining; customers have reduced their purchases after the price hikes.
Some owners shared their own experiences. In comparison to fast food workers, they immigrated to the U.S., some as refugees, some from minority backgrounds, including former fast food workers themselves. They praised the franchise model and discussed the political battles surrounding fast food wages, as well as legislative efforts to benefit low-wage workers, primarily African American and Hispanic populations.
On August 20th, the Governor’s Office announced that employment in California’s fast food industry has continued to grow, with 11,000 new positions added since the implementation of a $20 minimum wage. As of July, there were a total of 750,500 jobs in the state’s fast food industry, the highest ever recorded in California.
Despite this growth, some restaurant owners have struggled to operate due to costs and safety concerns, leading to closures. Rubio’s Coastal Grill, a fast food chain specializing in fish tacos and Mexican cuisine, filed for bankruptcy under Chapter 11 in June. In May, the chain closed 48 stores in California, with 86 remaining in operation in California, Arizona, and Nevada.
According to a statement quoted by KTLA, the company reported a decrease in foot traffic over the past few years, compounded by the shift to remote work during the COVID-19 pandemic. Food and utility costs continued to rise, and the “substantial increase in California’s minimum wage (25%) has added pressure to many of their stores.”
The increase in the minimum wage has also impacted job positions in related industries. In December last year, Pizza Hut laid off over 1,200 delivery drivers across California in anticipation of rising wage costs.
The debate over the fluctuation of employment positions in California’s fast food industry has been ongoing for several months. According to Calmatters, based on seasonally adjusted federal employment data, there has been a relatively stable trend over the past year, showing no significant increase or decrease in job positions.