California to Vote on Fast-Food Workers’ Wage Hike in 2024 After Businesses Gather Over One Million Opposing Votes

Flags are flown at a car caravan and rally of fast-food workers and supporters for passage of Assembly Bill 257, a fast-food worker health and safety bill, in Los Angeles, Calif., on April 16, 2021. Mario Tama/Getty Images

Californian citizens are set to vote on a proposal next year that seeks to improve the working conditions and raise wages of fast-food workers across the state, a measure that has attracted strong opposition from businesses in the sector.

Assembly Bill (AB) 257, also known as the FAST Recovery Act, proposed raising the minimum wages in California’s fast-food industry to $22 per hour by the end of 2023 for some businesses, when the current minimum wage for all workers is $15.50. While labor groups supported the law, businesses opposed it and eventually gathered more than a million signatures to hold a referendum on the issue.

According to the secretary of state’s office, more than 712,000 of these votes were deemed valid, passing the 623,000 threshold for the referendum. Voters will now decide on the law in the November election in 2024.

“Fortunately, now more than one million Californians have spoken out to prevent this misguided policy from driving food prices higher and destroying local businesses and the jobs they create,” Matt Haller, CEO of the International Franchise Association, said in a statement, according to the Los Angeles Times.

The Service Employees International Union (SEIU) expressed confidence that the law will eventually come into effect.

“Despite fast-food corporations’ efforts to distort the referendum process, we know California voters see through their tricks,” SEIU president Mary Kay Henderson said, according to the Associated Press. “No corporation is more powerful than half a million workers joining together to demand a seat at the table.”

Government Council, Raising Business Costs

The FAST Recovery Act was signed into law on Labor Day, Sept. 5, 2022. It was supposed to come into effect on Jan. 1, 2023. But on Dec. 30, a Sacramento judge temporarily halted the law.

On Jan. 13, the Sacramento Superior Court ruled in favor of a coalition of restaurateurs and small businesses seeking to stop the implementation of the FAST Act so as to hold a public referendum on the matter.

The law establishes a 10-member council run by the government which would include state officials, representatives of franchisees and franchisors, as well as employees and their advocates.

The council will have the authority to set wages for California’s fast-food workers, with employees having more power to negotiate wages, benefits, working hours, and other terms of employment.

The regulations would impact restaurants having at least 100 chains nationwide, which includes big names like Burger King, McDonald’s, and In-N-Out.

The California Restaurant Association (CRA) blamed Gov. Gavin Newsom for targeting “one slice” of the state’s small businesses, pointing out that the bill was signed when inflation in the United States is high.

“By arbitrarily singling out a sliver of the restaurant industry, California’s approach imposes higher costs on one type of restaurant while sparing others, putting some workers at a disadvantage and picking clear ‘winners’ and ‘losers,’” the CRA said in a statement.

Dangers of Higher Minimum Wage

Raising minimum wages can create negative consequences for the economy. According to the CATO Institute, a minimum wage hike would “disproportionally hurt the people they’re supposed to help.”

In 2012, an analysis of New York’s minimum wage increase from $5.15 to $6.75 per hour was conducted. It found that the younger, less-educated individuals suffered a 20.2–21.8 percent reduction in employment.

A 2004 review that looked into over 20 minimum wage studies found that a 10 percent increase in these wages resulted in a 4 percent increase in food prices.

A Congressional Budget Office study from 2019 that analyzed the impact of raising the federal minimum wage from $7.25 to $10, $12, or $15 per hour by 2025 found that while the measure would raise earnings for many people and lift some families out of poverty, the policy would end up making several lower wage workers jobless and push them into poverty.