In the wake of a new minimum wage law about to take effect next week, California fast food workers are facing massive job losses.
The Wall Street Journal reports that several restaurant chains, particularly pizzerias, are implementing job cuts, reducing work hours, and halting new hires in anticipation of the wage increase.
The act mandates that fast food restaurants with 60 or more outlets nationwide adopt the $20 minimum wage.
This move came after concerted efforts by labor unions and was also aimed at benefiting the healthcare sector, with a wage rise slated for June.
“The significance of this cannot be understated,” Newsom remarked, emphasizing the impact on 4 out of 5 workers in the industry.
Pizza Hut had already laid off 1,200 members of its staff in December.
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Some of the brand’s franchises even opted to cease their delivery services within California, turning instead to third-party platforms to maintain delivery options without directly employing drivers.
A local franchisee, Excalibur Pizza, disclosed plans to eliminate 21% of its staff.
Other California restaurants are also planning to follow this method, but they are worried about escalating operational costs.
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Despite attempts by certain businesses to seek exemptions from the new law, Newsom’s administration has been firm in its stance that no exclusions will be granted.
The legislation also potentially encompasses establishments primarily serving desserts and beverages.
In response to the impending wage hike, some companies, including Chipotle, have announced price increases for their products to offset the additional labor costs.
Starbucks has highlighted that it already has an average wage of $30 per hour for U.S. hourly employees.
This adjustment period saw some chains, like Starbucks, closing stores in California, indicating broader implications for the fast food industry and its workers as the state moves towards implementing the wage increase.
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