California fast food workers hail wage hike, franchise owners worried

Jack In The Box

02/04/2024 22:34

By Nathan Frandino and Dylan Bouscher
       SAN JOSE/HAYWARD April 2 (Reuters) - About half a
million workers at California fast food chains began receiving a
$20-an-hour minimum wage on Monday, and the increase had some
small business owners questioning their future, even as workers
said the raise helps pay the bills. 
   The pay boost, from the state's $16 minimum, followed
negotiations between groups representing workers and
restaurants. It applies to chains with 60 or more locations
nationwide. Governor Gavin Newsom, who signed the compromise
into law last September, said one goal is to make the state's
economy more inclusive. 
    To Brian Hom, 66, it feels the opposite.
    For seven years he and his wife have owned two Vitality
Bowls superfood café franchises in South San Jose, and now have
about three dozen employees, mostly young adults in high school
and college. 
    "It's kind of a catch 22, where people want higher wages,"
said Hom, who until last week paid the city’s minimum wage of
$17.55. "But at the same time the costs to run the business...
It doesn't work out."
    Hom has increased prices 5% to 10% in response. He has not
cut hours yet but said he was looking at staffing levels across
the two locations.
    “Eventually, as time goes on, if the cost of wages and cost
of labor is too high, if we're not making a profit, we would
have to close down,” Hom said. 
    Workers hailed their raise. 
    "For me and my family it means support, because when you
have a raise, you already have extra money with which you say
'well, today I can afford this bill, I'm no longer so worried
because where am I going to get that money or do something
extra, work on something extra to get that money," said Ingrid
Vilorio, 43, who has worked at Jack in the Box for four years. 
    The economic bottom line is not clearcut. Some studies
suggest a higher minimum wage can reduce hours and hiring, while
others point to better outcomes for workers. 
    It was also unclear how much pressure other businesses would
feel to raise their wages to match those affected by the law. 
    In California, a 2022 study showed, fast food workers earned
on average just over the state's $16 minimum wage, while the
average non-fast-food service worker earned just over $19.  
    In Hayward, where Vilorio works, the minimum wage for
businesses with more than 26 employees has been $16.90. 
    The new higher wage "somewhat alleviates the heavy cost of
living in California," said Vilorio, who also works as a
beautician.

 (Additional reporting by Liliana Salgado, writing by Ann
Saphir; Editing by David Gregorio)
 ((Ann.Saphir@thomsonreuters.com; 312-593-8342;
www.twitter.com/annsaphir; Reuters Messaging:
ann.saphir.thomsonreuters.com@reuters.net))