Attention Grants Pass Residents thinking about traveling through or driving through California; don’t stop for fast food unless you are ready for a $20.00 Happy Meal! And you might be served by a robot! California’s recent increase in minimum wage by 25%, from $16 to $20, is causing ripples throughout the state, particularly in the fast-food industry.
To cover the substantial rise in labor costs, numerous fast-food establishments have found themselves compelled to boost menu pricing. This strategy, while essential for their survival, has been met with discontent among consumers. McDonald’s, a fast-food giant, recently made headlines with its significant price hikes. For instance, the Big Mac combo, once a wallet-friendly option, now carries a price tag of $18 in California.
The surge in costs is making it increasingly challenging for low-income customers to afford their favorite fast-food treats. Consequently, many individuals are now compelled to cut back on their fast-food consumption. Moreover, to cope with the escalating minimum wage, major fast-food chains such as McDonald’s, Popeyes, and Pizza Hut are resorting to layoffs. Pizza Hut has announced plans to lay off over 1,200 employees in response to the wage increase.
These actions underscore the struggles faced by businesses in adapting to the new wage requirements. Some companies, like El Pollo Loco, are turning to automation to reduce labor costs, for instance, automating salsa-making procedures. However, such measures are not without consequences, as they contribute to increased unemployment rates.
California Governor Gavin Newsom has faced criticism for endorsing the minimum wage legislation. Business owners, consumers, and right-wing politicians alike have expressed opposition, fearing that the burden will inevitably fall on consumers as restaurants are forced to raise prices to cover costs. Nevertheless, Newsom defends the plan, framing the increase as a compromise.
Tia Orr, executive director of the Service Employees International Union California, hails the legislation as a “transformational step toward an economy that works for all, not just billionaires.” She acknowledges that raising the minimum wage may result in layoffs but argues that more than half a million fast-food employees now earn a more decent wage.
As the bill takes effect this spring, experts are left to wonder whether restaurant operators will continue laying off employees and increasing menu prices. Meanwhile, California’s unemployment rate has risen to 5.3%, up from 4.5% the previous year, adding to the uncertainty surrounding the impacts of the minimum wage hike on the job market and consumer pricing.
A newly hired fast food worker in Cali makes way more money than a first-year teacher in Missouri. Food for thought.
