Lawrence Cheng and his family own seven Wendy’s restaurants in California. He used to schedule 12 employees for each busy lunch shift in Fountain Valley. Now he schedules only seven. To cover the lost workers, he jumps in to run the register and make fries.
“We kind of just cut where we can,” he says. “I schedule one less person, and then I come in for that time that I didn’t schedule and I work that hour.”
Why the cost cuts? On April 1, California raised the hourly minimum wage of fast food workers from $16 to $20. Some restaurant owners and employees see benefits. Others scramble to make up for the higher costs.
California has raised the hourly minimum wage before. Between about 2007 and 2022, the state gradually increased the wage from the nationwide $7.25 to $15. According to a study from the University of California, Berkeley, job growth continued.
The same appears to be true since this April—at least, for now. California’s fast food industry has gained 8,000 more jobs than at the same time last year. Some restaurant owners even say the higher wages attract better job candidates.
Julieta Garcia has worked at a Pizza Hut in Los Angeles for a little over a year. She used to work six days a week. Now she works five. That means more time with her four-year-old son. Before the wage increase, she would miss phone payments and lose service. Now she can pay on time. She can afford to have a doctor check her son’s tonsils.
But the money for higher wages doesn’t come out of thin air. Restaurants have to make up for the increased pay in other ways. With inflation on the rise and rent costs high, many restaurants already run on a tight budget. Owners say they’ve had to cut employee hours and raise prices to stay in business.
Juancarlos Chacon owns nine Jersey Mike’s sub shops in Los Angeles. “I’ve been in the business for 25 years . . . and I never had to increase the amount of pricing [the way] that I did this past time,” he says. With the increased prices, he’s seen customers order less food. He also laid off about 20 part-time employees.
Lawrence Cheng doesn’t want to lay off staff. Instead, he’s cut overtime hours and reduced the number of workers per shift. He also raised menu prices by 8%. Even so, he found himself $20,000 over budget during a two-week pay period.
Many restaurants are still financially recovering from COVID-19 lockdowns. The higher wages add even more pressure. Experts predict big companies like McDonalds will find ways to cope, such as adding more automation and changing their menus. But the new wage law might devastate smaller restaurant chains.
California’s lawmakers want to help everyday workers get by. But will an increased minimum wage really help? Or will the higher costs backfire and lead to fewer jobs? Experts say it’s too early to tell.
Masters, treat your bondservants justly and fairly, knowing that you also have a Master in heaven. — Colossians 4:1
