California’s recent move to raise the minimum wage for fast-food workers to $20 per hour, up from the current $15.50, effective April 2024, has sparked significant discussions about its impact on the labor market, businesses, and the broader economy. The decision, which follows legislative efforts to bolster the wages of the state’s lowest-paid employees, has elicited diverse perspectives on its potential consequences and implications.
The minimum wage law appears to contain an exemption that benefits Panera Bread franchise owner by Greg Flynn, a major campaign donor to Governor Newsom. However, Newsom denies that the company is exempt.
While the law aims to help low-wage fast food employees, it does not apply to restaurants with on-site bakeries selling bread. “This story is absurd,” Newsom spokesperson Alex Stack said.
Panera Bread franchise owner Greg Flynn has donated over $220,000 to Newsom. Newsom’s office denies Flynn received special treatment, arguing Panera mixes dough off-site, but they did not clarify the exemption last year when asked.
Republicans are calling for an investigation into whether campaign contributions influenced the bill language. “Such a narrow exemption has very little practical value. As it applies to all of our peer restaurants in the fast casual segment, we will almost certainly have to offer market value wages in order to attract and retain employees,” Flynn stated.
“Put simply, campaign contributions should not buy carveouts in legislation,” state Senate leader Brian Jones said. “It’s unacceptable.”
“This exemption, there is no explanation for it. Someone had to push for it,” Assemblymember James Gallagher said.
The wage hike, set to affect approximately 400,000 fast-food workers, represents a notable step in targeted efforts to address wage disparities within specific sectors. California’s initiative reflects a broader trend of industry-specific minimum wage measures, such as the recent legislation to boost wages for health care workers, signaling a nuanced approach to addressing wage inequalities across different professional domains.
“I’m not going to try to start parceling every individual group,” Assemblymember Chris Holden said. “The way that the bill moved forward, everyone who’s in is in.”
Supporters say it was a compromise involving hundreds of businesses. “Like all transformational initiatives, it addressed difficult questions around its scope, including what constitutes a fast-food restaurant as opposed to a bakery, for example, and it involved literally hundreds of businesses in discussions,” Service Employees International Union California executive director Tia Orr said. “But the big picture is clear: a half million fast food workers in our state now have the power to improve their workplaces.”
“The last time the governor got in the middle of a restaurant-related controversy, his hesitation to address it turned a small problem into a much bigger one,” University of Southern California and the University of California professor Dan Schnur said.
The wage increase is expected to result in a 5% rise in the prices of fast-food items, according to economists. While critics have expressed concerns about potential price hikes and inflationary pressures, proponents of the wage hike emphasize potential benefits, including improved employee satisfaction, mental health, and overall well-being.
