Most of California’s estimated 500,000 fast-food workers would get a $20 minimum wage in 2024 — almost $5 an hour more than the current state minimum wage of $15.50—if a compromise bill is signed into law by Gov. Newsom. The raise would be lower than a $22 minimum wage that could have been authorized by a Fast Food Council.
Restaurant groupswere preparing to challenge the creation of the council in a 2024 referendum. The agreement is also the product of concessions from labor, including an agreement to not hold fast food companies liable for violations by franchise operators.Health care workers are also set to get a raise next year after a deal between labor and industry.
Speaking of the fast-food wage compromise,Sean Kennedy, executive vice president for public affairs for the National Restaurant Association, said, “This agreement protects local restaurant owners from significant threats that would have made it difficult to continue to operate in California.”
Joseph Bryant, executive vice president of the Service Employees International Union, said the new compromise bill gives the state “an opportunity to reaffirm our commitment to getting fast-food workers a seat at the table to make decisions about standards guiding their pay, training and working conditions.”
Raising the minimum wage for select industries can have ripple effects, boosting the economic welfare of selectlow-income workers while also leading to raises in other industries and, more broadly,potential price inflation.
Q. Should the minimum wage for fast-food restaurant workers be raised to $20 in 2024?
Norm Miller, University of San Diego
NO: While feasible for many restaurants, as the average pay is over $18/hour already, and $20 is a small increment from where we should be in 2024, a few restaurants will struggle. Some workers will be better off with a higher minimum wage. Others will be replaced by more automation and customer self-service. I’d prefer we let the market determine wages, except for vulnerable laborers like crop pickers, but if this passes, it won’t have much impact.
Lynn Reaser, economist
YES: The $20 wage compromise shows democracy working with the compromise reached between labor and industry. The saga began with the passage of AB 257, which established a council that could have boosted wages to $22 by 2024. The industry launched a referendum attempt to repeal the law and defund the council. The battle went back and forth and has ended without a costly referendum and with a new council representing multiple interests.
Gary London, London Moeder Advisors
YES: Other than the existential threats of climate change or nuclear annihilation, I do not believe that there is another issue that matters more than the hollowing out of the middle class. Any effort, legislatively or privately, that bolsters entry into the middle class should be supported. But be careful of unintended consequences such as automation taking human jobs. I also think there should be an exception for minors, who often learn to work at fast-food restaurants.
Bob Rauch, R.A. Rauch & Associates
NO: Minimum wage increases have been proven to hurt the most vulnerable and have a negative impact on total compensation. Minimum wage hikes result in fewer jobs, fewer hours, fewer benefits, and less consistent hours. Instead of increasing costs for employers, lawmakers should focus on expanding job opportunities through pro-growth policies, thereby raising wages for all. Minimum wage increases also destroy job opportunities for teens, cause prices to rise and increase our budget deficit.
Haney Hong, San Diego County Taxpayers Assoc.
NO: While this sounds nice — who wouldn’t want $20 an hour for entry-level jobs that do not require a high school diploma — we should acknowledge that the aggregation of everything we do in California has resulted in the highest and not lowest poverty rate in the nation. If we truly want to help the working poor, let’s tackle root causes for our expensive cost of living, like the lack of housing.
Chris Van Gorder, Scripps Health
YES: I have no issue with increasing the minimum wage for fast-food workers, nor do I have an issue with increasing the minimum wage for health care workers — if everyone understands their cost for fast food and health care will increase. While fast food restaurants can just increase their prices, health care must negotiate reimbursem*nt increases from commercial insurance companies because the government does not negotiate its rates for Medicare and Medicaid.
Jamie Moraga, Franklin Revere
NO: Raising the minimum wage to $20 for fast-food restaurant workers could lead to fewer job opportunities, a loss of jobs, hours cut and reductions in benefits and compensation. Businesses may also shift to labor substitution, with machines and automation replacing hourly jobs. Consumers will also feel the pinch as businesses accommodate increased costs with higher menu prices, service charges, reductions in food portions and store closures. California legislators shouldn’t dictate industry-specific wage increases.
James Hamilton, UC San Diego
NO: You don’t want to stay in these jobs forever, and most people don’t. The typical fast-food worker has moved on to something else within a year. These jobs offer a good opportunity for teenagers, people between full-time jobs, or someone needing a second chance. The wage hike will force restaurants to raise prices and lose customers, leaving fewer of these jobs available. The communities hurt the most will be the ones that this measure is supposed to help.
David Ely, San Diego State University
NO: The fundamental problem facing many workers is the high cost of living in California, especially in urban areas. This step will help a subset of workers but does nothing to address the high cost of living. It creates disparities since it applies only to some fast-food workers and not to employees in other industries earning $15.50. The $20 wage would apply statewide, even though the cost of living differs across California.
Kelly Cunningham, San Diego Institute for Economic Research
NO: Heightened minimum wages prevent lower-skilled, inexperienced workers from being employed and acquiring needed skills. Employers pay workers commensurate with the value of the work they perform. Bureaucratic central controls and dictates are unnecessary and counterproductive to production. Otherwise, alternative methods of production are imposed, such as fewer workers employed with the remaining ones impelled to produce more, replaced by automation or robotics, or operations may shut down. The end result is less employment and production available.
Alan Gin, University of San Diego
YES: It is significant that both the workers and the industry agree to the raise. Some argue that fast-food jobs are starter jobs for teenagers, but according to the Bureau of Labor Statistics, 60 percent of fast-food workers are over 20 years old and 20 percent are over 35. Two-thirds are women and 20 percent have children. Increasing the minimum wage would have fiscal benefits for governments, as a majority of fast-food workers also receive some form of government assistance.
Ray Major, SANDAG
Not participating this week.
Phil Blair, Manpower
NO: We should not select random jobs in random industries to mandate separate minimum wages. The job market in the U.S. is based on supply and demand. If these jobs were hard to fill, employers would pay more for the skill sets. The minimum wage rate should be for everyone, not just those not covered by some other rating system. It is time to look at the ridiculously low national minimum wage rate of $7.25 per hour.
Caroline Freund, UC San Diego School of Global Policy and Strategy
NO: Minimum wages by industry are distortionary. Regional variation makes sense to compensate for cost-of-living differences. For example, San Francisco is more expensive than Bakersfield. Industry variation, however, would push up food prices and pull workers out of other sectors like hospitality or agriculture. If there are too few workers in fast food, wages will naturally go up to attract workers. If wages are too low for sustenance, then the regional minimum wage is a better tool.
Austin Neudecker, Weave Growth
NO: I would advocate for reasonable raises to the minimum wage across the board. However, I am concerned that raising the minimum wage for individual industries would cause a wasteful union vs. corporate lobby-off. I would expect money to be thrown into political campaigns, ballot initiatives and legislation that, ultimately, cause unfair wage differences, favoring specific workers. We should evaluate and establish a fair wage for all residents of our state and not for select industries.
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