Fast Food Workers Are Getting Laid Off: How Minimum Wage Laws Affect You and Your Wallet
Written by
Gina Hagler
Edited by
Jana Lynch
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Theoretically, a higher minimum wage is a good thing that could ease the cost of living for more Americans. However, the practical application of raising the minimum wage is causing job loss and higher prices in states like California.
For instance, fast food workers in California have been getting laid off due to the state’s new $20 minimum wage law, which is specifically designed for fast food employees. In conjunction is the Fast Act, which expands the definition of ‘fast food restaurant’ to any chain with 60 or more locations in the US. These companies must comply with the new laws, resulting in negative consequences for some employees.
Starbucks, known for its employee-friendly compensation and perks like healthcare, 401(k), tuition coverage, paid time off and more, closed several of its California locations. Pizza Hut and Excalibur Pizza eliminated numerous delivery jobs in California, citing “rising operating costs” as the reason. Chipotle has reported an upcoming increase in its food prices due to the new law, and some franchises have completely discontinued operations.
Employers are finding that, to comply with the new laws, they need to do one of two things: raise prices to offset the new salary requirements or lay them off and automate as many functions as possible. Neither option is ideal for workers or consumers. And for those who historically have worked in fast food, the higher salary requirements may lead to increased job market competition, leaving those with less experience or education out of contention for those positions.
While at first glance these new laws seem to benefit workers, underneath the surface is a different story. Workers are losing their jobs and businesses are shutting their doors. Additionally, business owners’ profits are taking a hit as customers rethink spending their money on fast food.
In the long run, these laws may prove to be effective, but in the short term, they’re not quite doing what they set out to do.
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