Bay Area Auntie Ann’s Mogul estimates California’s new $20 minimum wage will cost him $470,000 per year

Fast-paced workers in California will be paid at least $20 an hour starting Monday as a new law is set to go into effect providing more financial protections for the once-low-paying job while threatening to raise wages in a state already known for its high wages. of life.

Democrats in the State Legislature passed the law last year in part as an acknowledgment that most of the more than 500,000 people who work in fast food restaurants are not young people who earn extra money, but older people who work to support their families.

This includes immigrants like Ingrid Vilorio, who said she started working at McDonald’s shortly after arriving in the United States in 2019. Fast food was her full-time job until last year. Now, he works eight hours a week at Jack in Box while doing other work.

“The $20 raise is good. I wish it would have come sooner,” Vilorio said through a translator. “Because I wouldn’t need more jobs in different places.”

The law was sponsored by a trade association that represents fast food restaurant owners. But since its passage, many franchise owners have complained about how the law affects them, especially during California. economic decline.

Alex Johnson owns 10 Auntie Anne’s Pretzels and Cinnabon restaurants in the San Francisco Bay Area. He said sales declined in 2024, which forced him to leave his office staff and rely on his parents for salary and social assistance.

Increasing the wages of his employees will cost Johnson about $470,000 each year. He has to raise prices anywhere from 5% to 15% at his stores, and he is not hiring or looking to open new locations in California, he said.

“I try to be fair to my employees. I pay them as much as I can. But this law is really affecting our operations,” Johnson said.

“I have to consider selling or even closing my business,” he said. “The profit margins are much smaller when you factor in all the other costs that are going up.”

Over the past decade, California has increased its minimum wage for most workers to $16 an hour. The biggest concern at the time was whether the increase would cause some workers to lose their jobs as their employers’ money increased.

Instead, the data shows that wages have risen and jobs haven’t fallen, said Michael Reich, a professor of labor economics at the University of California-Berkeley.

“I was surprised by the decline, or how difficult it was to get results from work. If anything, we get better results from work,” Reich said.

In addition, Mr. Reich said that while the state minimum wage is $16 an hour, the largest cities in the state have their own laws that pay higher wages than that. For most fast food restaurants, this means that the jump to $20 an hour will be minimal.

The law marked a carefully crafted standoff between the fast-food industry and labor unions, which have been fighting over wages, benefits and legal fees for nearly two years. The law began in private negotiations between organizations and companies, including the unusual part of sign confidentiality agreements.

The law applies to restaurants that offer little or no table service and that are in the national group with at least 60 locations nationwide. Restaurant those who work in shops are exempt, as are restaurants that make and sell bread as an independent product.

At first, it appeared that the removal of bread was used at Panera Bread restaurants. Bloomberg News reported that the change would benefit Greg Flynn, a wealthy Newsom campaign donor. But Newsom officials say the wage increase applies to Panera Bread because the restaurant does not make the dough on-site. Also, Flynn announced that he would pays its workers at least $20 an hour.

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Beam was reported from Sacramento, California.

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