California fast-food industry workers saw a spike in wages after state officials first considered and then mandated a minimum wage raise for most fast-food restaurants. While there are arguments for and against the California legislation, with opponents concerned the wage hike could be a job killer, California Governor Gavin Newsom put the spotlight on new employment data that points to a growing industry in The Golden State before appearing at the Democratic National Convention this week.
According to early data released by the U.S. Bureau of Labor Statistics, quick-service restaurants have continually added thousands of jobs in California every month this year. Recent data showed the industry reached a record employment total of 750,000 in July, with 11,000 additional fast-food jobs since April (when the minimum wage was raised to at least $20 per hour in California).
“What’s good for workers is good for business, and as California’s fast food industry continues booming every single month, our workers are finally getting the pay they deserve,” Newsom said in a statement. “Despite those who pedaled lies about how this would doom the industry, California’s economy and workers are again proving them wrong.”
Newsom signed the industry wage increase into law last September, which also created a first-of-its-kind Fast Food Council that allows workers to participate in the development of job standards. The council’s nine voting members are able to increase the hourly minimum wage by up to 3.5% annually.
The wage bump for hundreds of thousands of fast-food workers has been closely watched. According to the UC Berkeley Labor Center, most of the state’s fast-food employees are adult women of color who previously made close to $16 an hour, California’s general minimum wage. Legislation advocates argue that the wage hike has increased these employees’ ability to afford rent, food, and other basic necessities that will improve their family’s quality of life and decrease reliance on taxpayer-funded aid programs.
“I don’t think minimum wage (increases) kill jobs; I think they kill job vacancies,” Michael Reich, who chairs the Center on Wage and Employment Dynamics at UC Berkeley, said. “When the minimum wage goes up, more workers are attracted to those jobs, and they are more likely to stay in them. The numbers do show that wages can be much higher, and yet the business can do well, and workers can do well.”
Reich argues that the higher wages could ultimately attract more workers to the fast-food industry, which traditionally has high turnover rates, as he believes that the new job figures highlighted by the governor represent some of the best evidence yet that this industry is growing.
However, some economists agree that more evidence is needed to better assess the full impact of the California wage increase.
While the state legislation only applies to chains with more than 60 stores nationwide, critics argue that employers have to cut employee hours and jobs to manage the increased payroll costs. Opponents say that a separate BLS jobs data set is more reliable because it’s adjusted for seasonal economic influences, showing an increase in just hundreds of fast-food industry jobs since April.
“Every day you see headlines of restaurant closures, employee job losses and hours cut, and rising food prices for consumers,” a spokesperson with the International Franchise Association, a trade group representing fast-food franchisees and franchisors, said in a statement. “Local restaurant owners in California are already struggling to cope with the $20/hour wage, as the Fast Food Council considers additional wage increases. All the while, workers and consumers are feeling the pinch.”
While the fast-food industry has experienced needing to cut staff members, reduce employee hours, and hike product prices, John Logan, the director of labor and employment studies at San Francisco State University, stated that the new legislation has not materialized the catastrophic impacts that employment opponents predicted.
“For the most part, it’s good news for supporters of the legislation. There’s no evidence of a disastrous impact on jobs,” Logan said. “In fact, the signs seem to be that the California fast food sector is continuing to grow.”
