logo
One year in, California's fast food wage hike brings higher pay, debatable job numbers

One year in, California's fast food wage hike brings higher pay, debatable job numbers

CNN02-05-2025

Edgar Recinos no longer has to choose between paying rent and buying groceries.
As a cook at a Wingstop restaurant in Los Angeles, Recinos got a significant wage bump last year — one of half a million fast food workers taking part in a great labor experiment.
California passed the Fast Food Accountability and Standards Recovery (FAST) Act in April of 2024 amid vocal support and fierce opposition. The first-of-its-kind policy increased the starting wage for California fast food workers to $20 per hour, which is higher than the overall state minimum wage. It also established a statewide council that sets wage and safety standards at fast food restaurants with more than 60 locations nationwide, like McDonald's, Jack in the Box, Burger King and Subway.
But one year later, the initial impact is a mixed bag. Economists are divided over the effect on employment. Workers do earn more, but many complain their hours have been cut. Fast food restaurant owners tell CNN they have been trimming employee hours and instituting hiring freezes to offset the cost of higher wages.
Recinos, like many, says his regular hours have been cut. When he doesn't get to fill in to make up the time, he finds himself 'in the same situation before the (wage) increase.'
As of March, employment at California's limited-service restaurants fell 3.1% from the year before, according to the St. Louis Federal Reserve using seasonally adjusted data from the Bureau of Labor Statistics. That's more than 22,600 jobs lost at fast food restaurants that both did and did not fall under the policy.
While that drop is in line with losses in the broader leisure and hospitably sector in the state, it's a more pronounced downswing than the national trend for fast food restaurants, BLS data shows.
Economists are clashing over whether the $20 wage is to blame.
Christopher Thornberg of Beacon Economics, who published a two-page commentary about the sector's losses in March, wrote the findings 'undercut much of the recent analysis released by pro-labor groups which have been claiming that the Fast Act has had little impact on (the) limited-service restaurant industry in California.'
While Thornberg told CNN it's premature to determine if the FAST Act is to blame for the job losses, he is seeing signs of negative cost.
'There is no such thing as a costless policy,' he said. 'Every part, every policy must, by definition, have some cost. And it's up to society to figure out if that trade-off is worth it, right?'
But Michael Reich, chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, told CNN there is no evidence the FAST Act is at the root of any job loss.
Reich did his own analysis of the data, comparing jobs at California's large fast food chains to those in states where the minimum wage did not change, as well as California's full-service restaurants and smaller fast food chains not subject to the policy. He says he found 'no significant negative employment effect.'
Instead, he points to California's population loss and slower economic growth compared to other states among the factors influencing job number fluctuations.
'If there are more people, there is going to be more demand for fast food. The different population growth is not because of minimum wage,' Reich said. 'So, if you don't control for that, you're looking at a correlation. That's not a causation.'
California fast food workers are now the highest paid in the nation.
Pay for impacted workers jumped 8% to 9% on average since April 2024, according to Reich. They also earn more than other Californians making minimum wage at $16.50 per hour.
That kind of money has been life-changing for Selvin Martinez, who works at a Weinerschnitzel in San Jose.
'Before the wage increase, I struggled to keep up with expenses. I limited my purchases. I limited what I ate,' Martinez said through an interpreter. 'I have been able to cover all of my bills, help my family financially, my savings have grown, and I'm thankful to God, because life feels easier now that I'm not as worried financially.'
Management did, however, shift the opening of Martinez's restaurant one hour later, cutting his weekly schedule shorter by a few hours.
He's not alone. Some workers tell CNN they now work fewer hours.
It's a hard metric to track as economists say there is no reliable data on work hours in fast food. But Recinos, who got a pay bump from $17.25 to $20 in April 2024, says he remembers working more back then.
Recinos now works about 20 hours a week at Wingstop but fights to get more time on the schedule. He pads his hours by filling in for absent co-workers or during higher-demand periods like the Super Bowl.
Recinos said managers blame the shorter hours on labor costs.
'It makes no sense. Because if you are cutting hours to your current workers, why are you hiring new people and blaming the increase of the wage?' he said.
The Wingstop management where Recinos works told CNN they use a standard labor matrix to schedule employees based on business volume and location. Management added that it's not related to the FAST Act, and they're committed to providing a consistent schedule and paycheck for their employees.
While the policy has helped some in the workforce, some owners face a different picture.
Kerri Harper-Howie says she's had to dip into long-term savings for her 40-year-old family business to keep it afloat, with the account down 30% in just nine months.
'We have literally been like, 'Do we need to leave California?'' Harper-Howie said.
The daughter of a social worker and a police officer, Harper-Howie watched her parents buy their first McDonald's franchise location in Los Angeles in 1984. Since then, she and her sister have grown the family business into 24 locations in Los Angeles County.
Harper-Howie says sales growth has declined in every single McDonald's location they own since the FAST Act went into effect — something that has never occurred in the family's four decades in the industry.
As a result of lower sales, Harper-Howie says they've streamlined job duties for employees and cut about 170,000 labor hours. She hasn't laid anyone off but just lifted a hiring freeze that was in place for the past year.
'We put (a supervisor) in charge of going to every restaurant and doing a food cost analysis. Are we giving out too many ketchups? Are we putting too much, too many squirts on the Big Mac?' Harper-Howie said.
She also had to increase prices to offset costs. That's caused employees at neighboring businesses who earn a lower wage to buy less food. Fast food menu prices in California rose by 1.9% relative to the increases in other states over the first six months of the policy, Reich said.
Sales are only now beginning to turn around for Harper-Howie due to a McDonald's partnership with 'The Minecraft Movie' for toys. 'The Minecraft Movie' is distributed by Warner Bros. Pictures, a subsidiary of Warner Bros. Discovery, the parent company of CNN.
Harper-Howie said her family will continue the business fueled on hope.
'Not 'hope' in like the 'racetrack hope,' but hope rooted in the fact that our family has weathered storms for 40 years,' she said. 'I do firmly believe in our brand. I love our brand, and so I'm just hopeful that something is going to get better.'

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

HBO and CNN owner Warner Bros Discovery to split in two
HBO and CNN owner Warner Bros Discovery to split in two

Yahoo

time6 hours ago

  • Yahoo

HBO and CNN owner Warner Bros Discovery to split in two

The owner of CNN and HBO Max, Warner Bros Discovery, says it will split into two companies by the middle of next year. The US media giant plans to separate its studio and streaming business away from its more traditional cable television networks. The move comes as streaming services attract hundreds of millions of users around the world but cable TV has seen audiences decline in recent years. HBO Max has enjoyed success with shows including Succession, The White Lotus and The Last of Us - while channels like CNN have been losing viewers. These hit shows will soon come under a new Streaming & Studios business, along with the company's film division and be headed by Mr Zaslav. The other new company will be called Global Networks - with CNN, Discovery and TNT Sports amongst its brands. This business will be led by Warner Bros Discovery's chief financial officer, Gunnar Wiedenfels. "We are empowering these iconic brands with the sharper focus and strategic flexibility they need to compete most effectively in today's evolving media landscape", said David Zaslav, Warner Bros Discovery president and chief executive. The splitting of the media conglomerate follows the 2022 merger that created Warner Bros Discovery. News of the split did little to improve Warner Bros Discovery's stock market performance. Shares were down nearly 3% in trading on Monday, with the stock down more than 10% this year. Peter Jankovskis, an analyst at Arbor Financial Services, said the split would help investors get a better understanding of each new company's value. "When you make the business less complicated, analysts can go in and do a better job of determining what the business is actually worth," he told the BBC. Warner Bros Discovery's flagship news channel, CNN, has seen its ratings decline. It averaged 558,000 viewers during primetime hours in the first three months of this year, 6% lower than the same period in 2024. In January, the network announced that it was laying off more than 200 employees as it looks to focus on its digital offerings. The outlook is brighter for Warner Bros Discovery's streaming platforms, which ended the first quarter of this year with more than 122 million subscribers. Monday's breakup announcement came after rival media giant Comcast announced last year that it would spin off its NBCUniversal cable television arm. That breakup is currently underway, with channels such as MSNBC and CNBC being separated from Comcast's other brands, including its Peacock streaming service. "It's a very competitive market right now, so many firms are trying to segregate out the streaming portion or the content portion of their businesses so that the remaining business can be valued separately", said Mr Jankovskis. Sign in to access your portfolio

GOP lawmakers uneasy about package to codify DOGE cuts ahead of House vote this week
GOP lawmakers uneasy about package to codify DOGE cuts ahead of House vote this week

Yahoo

time9 hours ago

  • Yahoo

GOP lawmakers uneasy about package to codify DOGE cuts ahead of House vote this week

Multiple Republican lawmakers are voicing concerns about backing a high-profile measure later this week to codify Elon Musk's DOGE cuts – raising questions about whether it can pass the House at all. Two Republicans – Reps. Mark Amodei of Nevada and Nicole Malliotakis of New York – separately told CNN they have concerns with the White House's push to defund the Corporation for Public Broadcasting. 'Still mulling,' Amodei said when asked if he would support the package of cuts. 'The impact on local PBS stations appears to be significant.' Other Republicans have heartburn about how it could cut the Bush-era program, PEPFAR, devoted to fighting HIV and AIDS globally. 'If it cuts PEPFAR like they're saying it is, that's not good,' GOP Rep. Don Bacon of Nebraska told CNN last week. House GOP leaders plan to put the package of cuts, totaling $9.4 billion, on the floor as soon as Thursday, according to two people familiar with the plans. But Speaker Mike Johnson will need near unanimity in his conference for the package to pass the House, where he can only lose three votes. Johnson said on Monday that he's 'working on' getting enough votes for the Department of Government Efficiency spending cuts package he hopes to bring to the floor this week. 'The only concern I heard initially was some wanted a little more specificity and detail on what was in the package,' Johnson continued. Asked how he would persuade members that wanted more specificity in the package, Johnson replied, 'I'm gathering up all their questions and we'll try to get them all answered. I mean, that's what we do in every piece of legislation.' If it can survive the House, it will face major obstacles in the Senate. Sen. Susan Collins of Maine told CNN on Monday that she has major misgivings about the global health cuts, including PEPFAR. 'I think we can change it. We're still figuring out what the set rules are,' Collins said. The White House sent its long-awaited spending cuts request to Congress as it seeks to formalize a slew of DOGE slashes to federal funding. The $9.4 billion package – known as 'rescissions' on Capitol Hill – would claw back previously appropriated government funding. The move to cancel the funding through Congress would insulate the administration from legal challenges related to its cuts to federal funding. Johnson said on Monday, 'We'd like to do multiple rescissions packages, and this first one I'm sure will be successful.' This initial request, however, is far more limited in scope than the more than $1 trillion in spending cuts that DOGE has promised. The lengthy time it took the White House to send over a first round of cuts underscores the uphill battle for even a Republican-led Congress to codify DOGE's work. CNN's Molly English contributed to this report.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store