Fast Food Costs Likely to Rise Under Law to Boost Worker Pay

A state bill aimed at helping working conditions in the fast-food industry is likely to come at a cost to customers.

Yes, your burger and fries will probably cost more in the future, under a recently approved bill to improve fast-food industry pay and working conditions in a major state.

The measure faces substantial industry pushback, however, and is likely to be fought over in court battles for months or years. 

The law creates a statewide 10-member panel of fast food industry representatives, workers, and government appointees to set minimum wage and training standards for the industry.

Among other measures, it would allow the panel to set minimum wages in the industry of up to $22 an hour. 

Local government efforts to raise pay rates for low-wage workers have gone on to have significant influence in the past. 

In 2014, Seattle passed a bill raising the city’s minimum wage to $15 an hour.  While critics scoffed at the measure at the time, the $15 an hour figure has become a widespread benchmark in many cities and some states. 

However, the Federal minimum wage remains $7.25 an hour, where it has been since 2009. 

Bill Would Help More Than 500,000 

The latest state legislation bill was signed into law by California Gov. Gavin Newsom earlier this month. 

In a statement, he said the measure will give “fast-food workers a stronger voice and seat at the table to set fair wages and critical health and safety standards across the industry.”

More than 500,000 people are said to be employed in the fast-food industry in the state, according to the bill’s backers. 

Restaurant industry groups have already launched a signature drive for a ballot measure to overturn the law, Dan Walters at Cal Matters recently pointed out. 

The International Franchise Association claimed in a statement that the measure could “increase prices as much as 20 percent for California restaurant goers.”

It also claims that the franchise business model “represents a key pathway towards achieving the American Dream while also generating employment, revenue, and opportunity for their immediate communities.”

The National Restaurant Association said in a statement that the law “threatens businesses already contending with a 16% increase in wholesale food prices and ongoing supply chain challenges.”

The California Department of Finance review of the legislation said the bill “creates significant ongoing costs” for the state’s department of Industrial Relations. In addition, it creates a sector-specific rule-making body within DIR, which could lead to a fragmented regulatory and legal environment for employers and raise long-term costs across industries.” 

The Industry groups have until December to gain the more than 600,000 signatures needed to qualify their measure for the ballot in 2024. 

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Previous California state laws seeking to benefit workers have seen similar industry pushback, notably in the case of Uber  (UBER) – Get Uber Technologies Inc. Report and Lyft  (LYFT) – Get Lyft Inc. Report drivers. The state passed legislation to classify them as employees, rather than contractors. 

However, the ride-sharing companies won approval for their ballot measure overturning the law in 2020 after spending tens of millions on the campaign. But the issue is now caught up in both state and federal court appeals.

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