Last fall, California Governor Gavin Newsom signed AB 1228, and today, the minimum wage for over 500,000 fast-food workers increased to $20 per hour. As of today, fast food workers in California will have the highest guaranteed base salary in the industry. The state’s minimum wage for all other workers, $15.50 per hour, is already among the highest in the United States.
According to an article by the AP, the minimum wage hike will cost Alex Johnson, who owns 10 Auntie Annies and Cinnabon restaurants in San Fransisco, upwards of $470,000 per year. "He will have to raise prices anywhere from 5% to 15% at his stores, and is no longer hiring or seeking to open new locations in California," he said.
“I have to consider selling and even closing my business,” he said. “The profit margin has become too slim when you factor in all the other expenses that are also going up.”
But the law doesn't stop there. AB 1228 creates a Fast Food Council that has the power to increase that wage each year through 2029 by 3.5% or the change in averages for the U.S. Consumer Price Index for urban wage earners and clerical workers, whichever is lower.
The law applies to restaurants offering limited or no table service and which are part of a national chain with at least 60 establishments nationwide. Restaurants operating inside a grocery establishment are exempt, as are restaurants producing and selling bread as a stand-alone menu item.
