California fast food workers face layoffs as state's $20 minimum wage goes into effect

California fast-food chains are laying off workers, raising prices and deciding against opening new stores as the state implements a minimum wage that is more than 175% higher than that required by the federal government.

California implemented a minimum wage for all workers at $16 per hour effective Jan. 1, 2024, although some individual municipalities have implemented higher minimum wage requirements. The new $20-an-hour minimum wage that goes into effect Monday only applies to fast-food workers, who will see their hourly wages rise by as much as 25%.

All fast-food employees, regardless of age, will see a $20 an hour minimum wage in California. This is significantly higher than the federal minimum wage of $7.25 for adults and the youth minimum wage of $4.25, which applies to employees under the age of 20 during their first 90 consecutive days of work with an employer. 

Alex Johnson, who owns 10 Auntie Anne’s Pretzels and Cinnabon bakeries across the San Francisco Bay Area said his sales have slowed down in 2024, forcing him to layoff employees and even use his parents to help with human resources, according to The Associated Press. 

The wage increase will cost Johnson about $470,000 annually, so he plans on raising prices between 5% and 15%. He is also no longer hiring new employees or looking to open more stores. 

"I try to do right by my employees. I pay them as much as I can," Johnson said. "But this law is really hitting our operations hard."

Two Pizza Hut franchisees said they planned to lay \off more than 1,200 delivery drivers and switch to using third-party delivery services such as Uber Eats and DoorDash, which requires customers to pay more for deliveries, per Business Insider.

The Southern California Pizza Company and PacPizza, both Pizza Hut franchisees, such as expressed plans to layoff about 1,200 employees as well.

Fast-food employees may be the only ones to have received a boost in pay for now, but the minimum wage for California healthcare facility workers is expected to rise to $21 per hour on June 1, 2024, and eventually increase to $25 per hour by 2028.

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