California $20 fast food minimum wage is a win for workers, but worries franchisees

by 24USATVApril 2, 2024, 10:40 a.m. 22
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For 35 years, Keith Miller has franchised Subway restaurants in Northern California. In that time, the minimum wage he must pay his employees has nearly quintupled. Customers, he said, continue to ask what happened to the "$5 footlong," which was a Subway staple when the minimum wage was less than half of what it is now.

On Monday, minimum wage for fast food workers in California jumped to $20. The statewide minimum wage is $16, although some municipalities (including San Diego) have slightly higher base pay for workers within city or county boundaries.

"You keep kind of wondering when you're going to break the camel's back? And I think that's our fear now is, to me, it's kind of an experiment," said Miller.

A major change for some fast food workers in California is set to take effect, but there are already concerns over the ripple effects, including possible layoffs. NBC 7's Kelvin Henry spoke with a San Diego economics expert about the potential impact.

A recent report from the state's Legislative Analyst's Office found the $16 minimum wage was hardly enough to keep up with California's cost of living, especially in coastal communities and major metropolitan areas.

"A higher minimum wage can help to some degree, but it's really somewhat limited in what it can do absent substantial changes in housing markets," said Seth Kerstein, an economist with the Legislative Analyst's Office who worked on the report.

Workers' rights advocates say the new minimum wage is a major win. The law that codified the new pay base also established a Fast Food Council to authorize future pay increases.

Starting Monday, fast food workers in San Diego and all across the state will start getting paid $20 an hour. But labor experts say the raise could come at a hidden price. NBC 7's Shandel Menezes reports.

"That's why we're also fighting for more protections around our working hours at the Fast Food Council. Our fight was never just about the race, but having the power to improve our industry," said Angelica Hernandez, a McDonald's worker, in Spanish.

Meanwhile, Miller, the Subway franchisee, wonders if this will be the change that squeezes out franchisees who only run a handful of stores.

"You want to do the right thing, but there comes a point where it's just not worth it. The risk and liability that you have in owning a business," said Miller.

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