Some Fast Food Chains Cutting Jobs as California Minimum Wage Increases

By 2024, California’s minimum wage will rise to $15 an hour. However, some fast food chains are already cutting jobs because of the cost. A conservative think tank called the Employment Policies Institute recently released a study saying that since 2015, when the minimum wage increase was first announced, some of the state’s biggest fast food chains have cut their staff by an average of 7%.

What Happens When Labor Costs Go Up

The study says that because of higher labor costs, fast food chains have had to lay off workers, close some locations, and put more money into automation and self-service technology. McDonald’s, for instance, has added kiosks and mobile ordering to many of its stores, and Jack in the Box has tried out robotic arms and voice assistants. The story also talks about a poll of 200 fast food franchisees who said that because the minimum wage went up, they were going to lay off workers, raise prices, and cut hours.

The study says that the increase in the minimum wage hurts the workers it’s meant to help, especially young and unskilled workers who depend on fast food jobs as a way to get ahead in life. The study says that for every 10% rise in the minimum wage, the number of jobs for people aged 16 to 19 drops by 2% and the number of jobs for people aged 20 to 24 drops by 1.5%.

The Arguments Against from Lawyers and Experts

But not everyone agrees with the report’s results and the way it was done. Some supporters and experts have questioned the report’s data sources, assumptions, and conclusions. They have also pointed out that raising the minimum wage would be good for workers and the business.

For example, the California Restaurant Association, which speaks for the fast food industry, has pushed back against the report’s claim that the higher minimum wage has caused fast food chains to close locations. The group said that the report was based on old and incomplete data, and that the major reasons for the closings were other things, like competition, market saturation, and changing consumer tastes.

Also, some economists and researchers have said that the report’s analysis is flawed and biased, and that the higher minimum wage hasn’t had much of an effect on business success or employment. They used results from other studies that showed that higher wages make workers more productive, keep them from leaving, make people spend more, and help the economy grow. They also said that the minimum wage increase hasn’t just hurt the fast food business and that other industries, like retail, health care, and education, haven’t lost many jobs or closed down significantly.

In Conclusion

Finally, the discussion about how the higher minimum wage will affect the fast food business is still going on, and no one is sure what the best solution is. Some fast food chains have said they are laying off workers and closing locations, but others have said they are investing in technology and new ideas to deal with the higher cost of labor.

Different studies disagree on whether the increase in the minimum wage has made jobs and business success worse or better. Some studies show that it has made workers happier and the economy grow. What happens with the minimum wage increase in the end may rest on many things, like the size, location, and strategy of the fast food chains, as well as the traits and preferences of the workers and customers, and the state of the economy as a whole.