‘Winners and losers’ as $20 fast-food wage nears
While supporters say boost will help workers, others claim law will lead to high prices, job losses, closures
LANCASTER, Calif. — A decade ago, Jamie Bynum poured his life savings into a barbecue restaurant now tucked between a Thai eatery and a nutrition store in a Southern California strip mall.
As a franchise owner of a Dickey’s Barbecue Pit, Bynum is pridefully particular about the details of his establishment — the size of the hickory wood pile on display near the entrance, the positioning of paper towel rolls on each table, the careful calibration it takes to keep his restaurant staffed 10 hours a day with a small crew.
The staffing, he said, has become harder in recent years, as the state’s minimum wage has steadily increased since 2017, often rising by a dollar per year. Today, it’s $16 an hour.
But Monday, it will jump to $20 an hour for most fast-food workers in California, propelling them to the top of what minimum-wage earners make anywhere in the country. (Only Tukwila, Wash., a small city outside Seattle, sets the bar higher, with a minimum wage of $20.29 for many employees.)
The ambitious law, which supporters hope to see replicated nationwide, has been characterized by opposing sides in stark terms. To backers, it is a step toward fair compensation for low-wage workers who faced significant risk during the pandemic. To opponents, it is a cataclysmic move that will raise food prices, lead to job losses and force some franchisees to consider closing.
“People don’t understand that when wages rise, so do the prices,” Bynum said.
Bynum has, in recent years, raised prices to try to maintain profit margins — and each time, he said, he has noticed a drop in customers. That, in turn, forced painful decisions about cutting staffing and trimming hours.
The new minimum wage will add $3,000 to $4,000 to his monthly expenses, he said, and while he hopes to keep all eight of his employees, he doesn’t know if he can make the numbers add up.
One employee, Josue Reyes, has worked at the restaurant on and off over the past decade.
He works the evening shift, often taking the bus and then riding his bike the rest of the way to the restaurant. Reyes, 35, said the consistent pay raises through the years — he now makes $16 an hour — had helped him significantly. He puts much of his paycheck toward assisting his mother pay the rent at their trailer park and tries to save where he can.
While another pay increase will help him, Reyes, who has worked in fast food for much of his life, said he feared that before long, jobs would become more competitive and harder to keep.
“There can be job losses because restaurants close,” he said on a recent weekday, dressed in jeans and a T-shirt for his shift. “No one wants that, but it seems very possible.”
The potential ripple effects of the law weighed by Bynum and Reyes at this fast-food restaurant in Lancaster, a high desert city at the northern edge of Los Angeles County, mirror conversations that will play out across the state as owners and employees — and eventually consumers — adjust to the new reality.
David Neumark, a professor of economics at the University of California, Irvine, said the impact would be more nuanced. “A higher minimum wage creates winners and losers,” he said.
Championed by powerful labor organizations, including the Service Employees International Union, the law will lift pay for more than half a million California employees who work for fast-food chains with 60 or more locations nationwide. It also creates a council comprising, among others, workers, franchise owners and union representatives who will oversee future increases to the minimum wage and devise workplace standards.
In an interview, Mary Kay Henry, president of the SEIU, said the law was long overdue. “We are talking about a billion-dollar industry that can and should afford this raise,” she said, noting that most workers are Black and Latino. “Raising pay improves employers’ ability to hire and retain workers.”