The Fast Food Industry Could Be In Danger – California’s Minimum Wage Laws Are Causing Major Problems

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The fast food industry has always been under fire. People complain about how workers earn so little compared to the cost of living. So, California implemented a new law to fix this issue. Now, fast food workers earn a minimum of $20 per hour.

Despite the positive change, it comes with big problems. Several fast food industries are handling the increased cost by raising food prices. This naturally affects consumers and possibly other industries. Read on to uncover note details!

The Problem With The Fast Food Industry

The fast food industry has raised many ethical questions for decades. The main concern is how poorly workers are paid for their services. How much do they receive? The amount varies, but reports show an average pay of $8.69 per hour.

Source: Freepik/drobotdean

Many consider this amount to be a poverty wage. These payments make it difficult for workers to access essential benefits. These may include health insurance and proper housing. Therefore, some have taken to working multiple jobs or relying on tips to survive.

California Government Raised the Minimum Wage

The unfortunate working conditions became alarming in California. Therefore, the government chose to fix the situation by raising the minimum wage for the fast food industry to $20 per hour. This new law becomes effective in April 2024.

Source: Flickr/Donald Norcross

Therefore, big companies like McDonald’s and Starbucks must now pay their workers a minimum of $20 for each hour of work. This means that people working in these establishments can now live a better life and expand their horizons. Sadly, the change brought some unexpected adverse effects.

Prices Will Inevitably Go Up

While the government’s decision to improve earnings for fast food workers, it created another problem. Fast food businesses will inevitably raise the cost of every item on their menu by 8 – 10%.

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Why raise the price? Experts explain that companies aim to balance costs to stay in business. Increasing this cost will destabilize this scale. Therefore, companies have to raise the worth of their products to remain operational.

It May Shatter the Fast Food Industry

Affordability and speed are the biggest reasons people visit fast food. Their meals aren’t exceptional, but they’re worth it for the price and how quickly they get prepared. This advantage may disappear with the new wage increase.

Source: Wikimedia /Kici

Prices of menu items will rise significantly. What’s the result? Customers will now be extra picky with their meals or choose the cheapest option. Therefore, smaller fast-food restaurants may struggle or even close due to the cost.

Workers May Lose Their Jobs Or Get Overworked

Besides raising their prices, the wage increase threatens job security. Companies will reevaluate their workforce and then terminate the least effective employee. But that’s not all! The remaining workers have a worse fate.

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Due to the staff reduction, the remaining workers will have to work harder. For example, a McDonald’s with five employees may cut to two or three. Therefore, the remaining two now have to work harder to earn $20 hourly. This fate may be even more depressing.

No more Employee Benefits

Some fast-food businesses are already removing employee benefits for their workers. These include days off or discounts on food purchased. These steps aim to offset the cost of increasing wages, and it will impact the workforce gravely.

Source: Freepik/KamranAydinov

Imagine removing benefits like paid time off. Workers won’t be able to spend quality time with their families or work on personal projects. It will transform California’s fast food industry workers into enslaved people before the year ends.

Higher Wages For Managers, Too

Some experts argue that the wage increase may cause higher positions pay to rise. Why? One argument is to maintain a hierarchical distinction. In other words, higher-ups want to earn significantly more than the lower workforce.

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Many acknowledge that this mindset is selfish. As of January 2024, the average fast food manager earns $22. This is significantly higher than the median $8.69 for lower workers. Regardless, these positions may go up to $45 by April.

People May Run Out of Business And Leave

The cost to operate a fast food business may rise significantly with the new law. Big corporations may handle this change excellently. However, small and local fast-food companies may suffer.

Source: Unsplash/Tim Mossholder

The increased food menu may deter customers from smaller businesses. It may also cause people to choose the cheaper options instead. These factors make it challenging to run a fast-food company. It might lead to many businesses closing up and leaving the industry.

The Government Might Lower The New Wage

The repercussions of the increased hourly wage are severe. Meals are going up, and jobs are becoming less secure. These factors make people believe the government may revise its decision.

Source: Pixabay/Hassas

Several experts see the wage hike as an experiment. The results show potential chaos throughout the industry and others. The government might revisit its new law soon. If they do, the minimum wage might be reduced to something less chaotic.

The Results May Change The US Fast Food Industry

California’s decision to tackle the fast food wage crisis is commendable. Other states avoided the matters, knowing the repercussions could be severe. The results may change the fast food industry forever.

Source: Twitter(X)/KFC

If California manages to fix the wage problem, other states may follow suit. But, if it becomes a messy situation, others may avoid making a change like this. It does seem like the government has a plan since they haven’t responded to the increased panic.

The Future Is Uncertain

The new law has pushed Californian restaurants to make drastic decisions. Food prices are rising. Employees are losing their jobs, and benefits are being removed. Others argue that these establishments are greedy and can handle the change.

Source: Wikimedia/Andre Carrotflower

For example, McDonald’s earned $25.494B in 2023. For an establishment that grossed that amount, it’s only fair for them to pay their workers. People argue that they can afford to raise their worker’s salaries with little to no effect. What do you think about this situation? Are corporations greedy, or does California need to reevaluate the wage change?

What do you think?

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Mary Scrantin

Written by Mary Scrantin

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