New $20 minimum wage for CA's fast-food workers starts next week

SAN FRANCISCO (KGO) -- One week from now, fast-food workers' wages will go up to $20 an hour.

That's a 25% increase from California's current $16 minimum wage that took effect on Jan. 1.

The federal minimum wage is $7.25 an hour, which has not changed since 2009.

Lawmakers' proposals to raise the federal wage so far have gone nowhere.

But hundreds of thousands of fast-food workers in California will soon see their minimum wage go up.

Business owners say costs will also increase for them and their customers.

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This new law will impact more than half a million fast-food workers in the Golden State. Supporters say it's a step in the right direction, but critics say it might hurt businesses.

Fast-food places like In-N-Out at Fisherman's Wharf in San Francisco are often packed at lunch. According to a manager there, workers' wages start $23 an hour. But, it's not the same story at other places.

At other fast-food locations, employees could be making $16, $17, or $18 an hour.

"The minimum wage has been too low for too long," said Terry Franklin, a San Francisco resident.

"It's a redistribution of wealth to the workers so they could have a better standard of living," said Roger Hayes, San Francisco resident.

"People are going to get more money. But everything is going to go up for everyone as well," said Juan Garcia, who's visiting San Francisco.

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John Logan is a professor of Labor Studies at San Francisco State University.

Logan says the minimum wage bump is needed; it is a start to improve the wages and improve the working conditions in the industry.

The new law may lead to more changes.

"It's also legislation that may act as a model for other states," Logan.

Bruce Stimson, the owner of Fisherman's Pizzeria, worries he will lose potential employees because of the new $20 minimum wage for fast-food workers.

"We're going to have to compete more dearly with [fast food restaurants]," said Stinson. "People are going to flock to the higher paying restaurants, higher paying fast food restaurants, which is going to leave us depleted of labor sources. We will be forced to hire less efficient workers."

Alex Johnson owns several locations of Auntie Anne's and Cinnabon.

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"I have 10 Auntie Anne's and Cinnabon's in the Bay Area. So five Auntie Anne's, five Cinnabons," said Johnson.

Johnson says the new $20 minimum wage for fast-food workers will hit his bottom line hard.

"That's going to impact us by an increase of $470,000 annually across those 10 stores," said Johnson.

Johnson says he may have to consider layoffs and closing some locations. He says there are also other drawbacks.

"It means that we have to raise prices which we don't want to do," said Johnson.

Pizza Hut reportedly laid off hundreds of delivery drivers, saying that it would count on gig workers for help.

Labor studies professor John Logan doesn't know if the new law will result in job losses or fast-food workers having their hours lowered.

Again, he says the fast-food industry is a multi-billion-dollar industry and they can afford to pay higher wages.

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