Lawrence Chen and his family own seven Wendy’s in California. In Fountain Valley, they used to schedule 12 employees for each busy lunch shift. Now they schedule just seven. To make up for the lost staff, he’s been helping run the cash register and make fryers.
“Just cut back where you can,” he said. “Take one less person and have them come in and work those hours that they weren’t scheduled to work.”
Why cut costs? On April 1, California raised its minimum wage for fast-food workers from $16 to $20 an hour. While some restaurateurs and employees are benefiting, others are struggling to make up for the increased costs.
California has raised its minimum wage before. Between 2007 and 2022, the state gradually raised the hourly wage from the national average of $7.25 to $15 an hour. Job gains have continued, according to a University of California, Berkeley study.
Since April, that same trend appears to be true, at least for now: California’s fast-food industry has added 8,000 more jobs than it did at this time last year. Some restaurateurs even say higher wages would attract more qualified job applicants.
Julieta Garcia has been working at Pizza Hut in Los Angeles for a little over a year. She used to work six days a week, but now she works five, which means she has more time to spend with her 4-year-old son. Before her pay increase, she would pay her phone bill late and lose service. Now she can pay on time and afford to take her son to the doctor for his tonsils.
But the money to raise wages doesn’t just appear out of thin air. Restaurants have to make up the cost in other ways. Rising inflation and high rents mean many are already operating on tight budgets. Owners say they’ve had to cut staff hours and raise prices to stay in business.
JuanCarlos Chacon owns nine Jersey Mike’s sandwich shops in Los Angeles. “I’ve been in the business for 25 years and I’ve never had to raise prices,” he said. [the way] “Just like we did the other day,” he said. He said the price hikes led to fewer customers ordering. He also laid off about 20 part-time employees.
Lawrence Cheng has no plans to lay off any employees. Instead, he cut overtime hours, reduced the number of employees per shift, and increased menu prices by 8%. Still, he went over budget by $20,000 in one two-week pay period.
Many restaurants are still recovering financially from the COVID-19 lockdowns. Rising wages will put added pressure on them. Experts predict that large companies like McDonald’s will find ways to cope, such as by increasing automation or changing their menus. But the new wage law could deal a devastating blow to smaller restaurant chains.
California lawmakers want to help ordinary workers make ends meet, but will raising the minimum wage really help? Or will higher costs backfire and lead to fewer jobs? Experts say it’s too early to tell.
Masters, know that you also have a Master in heaven, and deal with your servants justly and justly. — Colossians 4:1
