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Judd Legum
Dec 03, 2024

What would happen to the fast food industry if it had to pay its workers something closer to a living wage?
California decided to find out. In September 2023, the state enacted a new law that required fast food restaurants with more than 60 locations nationwide to pay workers a minimum of $20 per hour a $4 per hour increase. The new minimum wage went into effect in April 2024. More than 700,000 people work in California's fast food industry.
Almost immediately, Americans nationwide were told the new law would devastate California's fast food industry. In November 2023, before fast food chains in California were even required to pay higher wages, Good Morning America aired a segment warning that customers of McDonald's and Chipotle could be faced with higher prices.
In April 2024, Good Morning America ran another piece about the "stark realities" and "burdens" restaurants would face due to the new law. The segment quoted an owner of several El Pollo Loco franchises, who claimed that she would have to "reduce hours by roughly more than 10%, simplify menus, and implement new technologies such as automated ordering kiosks." An April 2024 piece in the Wall Street Journal, citing two weeks of data after the new wage went into effect, claimed that "fast-food and fast-casual restaurants in California have increased prices by 10% overall." It also relied on anecdotes from people like John Matthews, a "62-year-old project manager" who " believes the fast-food wage law is a drag on the state economy." Matthews told the paper that he "shifted his roughly $600 in monthly restaurant spending to independent, sit-down restaurants and away from McDonalds, Chipotle and other chains.
Now, we have actual data about the impact of the law. The Shift Project took a comprehensive look at the impact that the new law had on California's fast food industry between April 2024, when the law went into effect, and June 2024. The Shift Project specializes in surveying hourly workers working for large firms. As a result, it has "large samples of covered fast food workers in California as well as comparison workers in other states and in similar industries; and of having detailed measurement of wages, hours, staffing, and other channels of adjustment."
Despite the dire warnings from the restaurant industry and some media reports, the Shift Project's study did "not find evidence that employers turned to understaffing or reduced scheduled work hours to offset the increased labor costs." Instead, "weekly work hours stayed about the same for California fast food workers, and levels of understaffing appeared to ease." Further, there was "no evidence that wage increases were accompanied by a reduction in fringe benefits such as health or dental insurance, paid sick time, or retirement benefits."
/snip

Prairie Gates
(4,063 posts)They took an extremely modest haircut, with the result being that their workers improved their quality of life, and they don't have to rely on federal and state subsidies to get through the month.
Thank you California for telling the thief-owner class that they can still get extremely rich while paying their workers something approximating a living wage.
MichMan
(14,107 posts)While other minimum wage workers aren't.
unblock
(54,541 posts)That said, there are other issues for other industries. For instance, California has a bill to phase in an increase to $20/hr for health care workers, but this has an impact on Medicare costs, so there are some considerations here that didn't apply to the fast food industry.
But i agree that it doesn't seem right to have a different minimum wage for just one industry. Presumably, they will fix this over time...
DeepWinter
(833 posts)it actually affected many people. My local McDonald's is advertising $18/Hr to start. Go anytime after school and it's staffed with teenagers working part time evenings and weekends.
Johnny2X2X
(22,243 posts)Last edited Tue Dec 3, 2024, 02:52 PM - Edit history (1)
I don't think people understand how relentless the propaganda is. It's so bad, that some of the actual low wage workers are on board with keep wages low.
They blame inflation on McDonald's workers making $16 an hour.
Had a conversation with a freind and our bartender a few weeks ago. Here in Michigan, they are raisiing the minimum wage for tipped workers to $12 an hour. The bartender was complaining that that's too much... Said people will tip her less, I said, well I won;t, still getting $1-2 per beer from me. Then she talked about McDonalds and how everything is a buck or two more an item now because the workers make so much more now. I had a good comeback, "Well, I'm willing to pay an extra dollar if it means some worker can earn a living, that's why I tip you $1 a beer."
The my biddy chimes in with how these are entry level jobs and not meant to make a living at, and the workers should be trying to learn skills to move up to better jobs. Iused to work with this guy at a restaurant in 1990, so I asked what he made as a line cook in 1990. He answered like $7 an hour, so I got out my phone for an inflation calculator, "Dude, $7 in 1990 is $17 today, so you're bitching about kids making $16 an hour for restaurant work today when you were making more than that in 1990 dollars."
https://www.usinflationcalculator.com/
They gewt regular people to lead the charge against wage growth. But none of these people even realize that they were once or are currently the people they are talking about depressing wages for.
Mosby
(18,088 posts)I think people don't know you can use them for incomes not just prices of things.
One of my first jobs was at a drug store, at some point I was trained how to do the monthly report that went to corporate, it included sales data and payroll information. It was the size of a blueprint sheet of paper. It was necessary for me to have access to payroll, including the management.
The drug store was a large one and busy, it was a SuperX that was in a great spot because the 51 freeway didn't exist yet. In todays dollars, the manager was making $161,000/yr.
That was back when retail management was a good career path, which is no longer true.
Johnny2X2X
(22,243 posts)In 1990 he was making $155K in todays dollars and his benefits were far in excess of what most anyone has today. I have 2 bachelors, one of them an engineering degree, and I have an MBA with a focus on finance. That's what it takes to earn the middle class wage my dad raised our family on, but my benefits are still far behind what his were then.
I just can't get over that people think $16 an hour, or even $20 an hour is some big amount. Young adults making $16 an hour can't afford to live, they probably live at home with their parents still or maybe live with a few friends in a small apartment. Same as we did in 1990 making $6 or $7 an hour.
Honestly had someone tell me that McDonald's workers can now afford to own homes and 2 cars and that's why inflationis so high. You work at McDonald's as a regular worker, there is no way you are buying a house, period. It's the same entry level job to barely scrape by on that it was in the 1980s and 90s.
One of my first jobs in high school was at Burger King in 1987, the manager making $5.50 an hour was someone I looked up to, couldn't believe he was working 48 hours some weeks. He was able to afford a decent apartment with a roommate and he had a fairly nice and fast car. Now a days, that would come out to $16.28 an hour and I doubt he could afford the life he had back then.
spanone
(138,156 posts)multigraincracker
(34,836 posts)Those are a gift to management that get their compensation is stocks.
Overall, U.S. publicly traded companies bought $198.8 billion worth of shares in the second quarter, up 11.6% from the first quarter and up 124% from the same period a year ago, according to the S&P Dow Jones Indices. Share buybacks were expected to remain elevated for the rest of the year.
Companies buy back shares and pay out dividends when they have extra cash and are feeling confident in their business prospects. Such programs became less common last year when the pandemic hit and the economy suffered with it.
McDonalds suspended its $15 billion share buyback program in March of last year, when it appeared that business would be suppressed for an uncertain period of time. In short, McDonalds along with many other restaurant chains opted to hoard cash as part of a survival strategy. It also enabled the company to give operators royalty and other breaks to ensure they would remain open.