On April 1, the minimum wage for California fast-food employees increased to $20 per hour, providing a $4 pay increase for 553,000 fast-food workers.
Nevertheless, chain restaurant owners expressed fears that the higher minimum wage would negatively impact their business, leading them to reduce employee hours, increase food costs, and even close some of their locations.
Rubio’s Coastal Grill declared bankruptcy in June and stated it was closing 48 locations, blaming the hike in the minimum wage among other things for its financial difficulties.
The Employment Policies Institute has now released a research, which shows that 67% of fast-food companies stated the minimum wage raise will cost $100,000 per site year, more than a month after the Mexican restaurants made their declaration. Among owners, one in four estimated the annual cost would exceed $200,000.
Two hundred business owners from all around the Golden State answered the poll. Restaurant operators reported reducing hours by 89%, limiting employee pickup or overtime opportunities by 73%, and consolidating or reducing staff roles by 70% since April.
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“Even before the $20 wage went into effect, fast-food restaurants made it clear they would not be able to survive,” Rebekah Paxton, EPI research director, stated. “Now after just a few months, the policy has been a disaster, killing jobs and shuttering restaurants. Gov. Newsom and state lawmakers should be listening to small business owners and their employees instead of trying to sugarcoat the truth.”
