How CA's minimum wage hikes for fast food, health care workers could impact economy

BySuzanne Phan KGO logo
Tuesday, June 25, 2024
How CA's minimum wage hikes could impact economy
The effort to boost the minimum wage for California fast food workers and health care workers is seeing mixed results and reactions.

SAN FRANCISCO (KGO) -- The effort to boost the minimum wage for California fast food workers and health care workers is seeing mixed results and reactions.

The owner of the McDonald's at Stonestown Mall in San Francisco says he's closing that location partly because of the increasing minimum wage costs.

RELATED: McDonald's at SF's Stonestown Galleria closing Sunday after more than 30 years, owner says

The McDonald's at Stonestown Galleria in San Francisco is closing permanently after more than 30 years on Sunday.

Meanwhile, the July 1 bump in pay for health care workers will likely be delayed until October.

"We do a lot of work for what we get paid for," said Lori Viramontes, a medical assistant for a neurosurgeon.

Lori Viramontes has been health care worker for more than two decades.

On July 1, hundreds of thousands of the state's lowest-paid health care workers in California are supposed to see their minimum wage bumped up to $25 an hour.

That mandate does not affect Viramontes.

But she says it will impact many other health care workers who don't make enough.

"I feel in private practice, they overwork you and they underpay you by far," said Viramontes.

"They deserve to be compensated for all their hard work they are doing," said health care worker Torianna Finley.

RELATED: Democrats agree to delay health care worker minimum wage increase to help balance California budget

According to the latest estimates from the UC Berkeley Labor Center, about 426,000 workers are expected to benefit from the law. That includes medical assistants, front office staff, medical billing personnel, patient techs, janitors, and food service workers, among others.

The law applies to all low-wage health workers who are employed by a facility that is subject to the law. It does not matter whether or not those workers belong to a union.

Because California faces a $46 billion shortfall, state Democrats agreed on a proposal to delay the planned minimum wage bump for health care workers until October 15.

The wage increase will happen if the state's fiscal situation improves or if the state is able to secure federal funding.

Otherwise, it's possible the law and the wage increase won't take effect until Jan. 1, 2025.

San Francisco State University Professor John Logan is chair of the Department of Labor and Economics. He says the minimum wage increase is needed and that there's a big problem with recruiting and retaining some health care workers.

"We are also doing it to make sure we have the health care workers that we need now and we're going to desperately need in the future," said Logan.

MORE: 'It's sad': Oakland In-N-Out grills last burgers Sunday, permanently closing

Sunday was closing day for In-N-Out Burger off Interstate 880 in Oakland.

In April, the state boosted the minimum wage up to $20 an hour for fast food workers.

The owner of the McDonald's at Stonestown Galleria says he made a gut-wrenching decision to close because of two reasons - a disagreement on a lease term with the building's landlord and then the rising costs of running the restaurant including the new state-mandated $20 an hour minimum wage for fast food workers.

"It impacts the part of the market that is already on the edge," said Chris Thornberg, the founder of Beacon Economics.

"When you raise the minimum wage, that either has to come out of the manager or the owner's pocket, or it gets passed along to the consumer in the form of a higher price," said Thornberg.

We are starting to see the impacts of higher minimum wages. Thornberg believes there will be fewer restaurants, people will pay higher prices, and in the cases of 16-to-19-year olds unemployment rates have increased.

Others say better wages are a must for people who serve and care for us and the wage increases will pave the way for changes in other states and industries.

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