SACRAMENTO, Calif. — Most fast food workers in California would be paid at least $20 per hour next year under a new bill in the state Legislature aimed at ending a standoff between the industry and labor unions over wages and working conditions.
California’s minimum wage is already among the highest in the country at $15.50 per hour. The bill, filed Monday with the blessing of both labor unions and the fast food industry, would increase the minimum wage to $20 per hour for workers at restaurants in California that have at least 60 locations nationwide — with an exception for restaurants that make and sell their own bread, like Panera Bread.
The bill will impact about 500,000 fast food workers in California, according to the Service Employees International Union, which has been working to unionize fast food workers in the state. They include Ingrid Vilorio, who works at a Jack In The Box in the San Francisco Bay Area. She said the raise will help her family, who until recently was sharing a house with two other families to afford rent.
“A lot of us (in the fast-food industry) have to have two jobs to make ends meet, this will give us some breathing space,” said Vilorio, who also works as a nanny.
The bill is the first of what could be multiple victories for labor unions at the California Legislature this year on the heels of high-profile strikes in the entertainment and hospitality industries dubbed by some as “hot labor summer.” On Monday, the state Assembly voted to advance a proposal to give striking workers unemployment benefits — a policy change that could eventually benefit Hollywood actors and writers and Los Angeles-area hotel workers who have been on strike for much of this year.
And health care workers are pushing for a $25 minimum wage in a bill that could get a vote before the state Legislature adjourns for the year on Thursday.
“For us the big victory here is a seat at the table with employers,” said Mary Kay Henry, international president of the Service Employees International Union. “We think the lesson here is major corporations in the United States that operate globally can sit down and think through common issues in their industry with workers.”
It’s unusual, but not unprecedented, for states to have minimum wages for specific industries. Minnesota lawmakers created a council to set wages for nursing home workers. In 2021, Colorado announced a $15 minimum wage for direct care workers in home and community based services.
In California, most fast food workers are over 18 and the main providers for their family, according to Enrique Lopezlira, director of the University of California-Berkeley Labor Center’s Low Wage Work Program.
Raising the minimum wage can both benefit and hinder the economy, according to Sung Won Sohn, an economist at Loyola Marymount University. He said any time wages increase in one sector, it tends to increase salaries in other sectors, too — meaning many other workers will benefit. But higher wages generally mean higher inflation, which increase the price of goods for everyone. Sohn said he estimates about two-thirds of the consumer price index — a measure of the change in prices for goods and services — can be explained by labor costs.
“From a purely economic analysis, the consequences are pretty clear,” Sohn said. “From a social point of view, many of the workers who are engaged in lower wage jobs — they really need it.”
The fast food industry’s unique structure — with independent owners operating franchises under the umbrella of large corporations — have made it difficult for governments to regulate and labor unions to organize. Last year, California Democratic Gov. Gavin Newsom signed a law to create a Fast Food Council with the authority to raise wages and set workplace standards for the fast food industry.
Before the law could take effect, the fast food industry gathered enough signatures to qualify a referendum on the law in the November 2024 election. That meant the law would be on hold until voters could decide whether to overturn it.
Furious, labor unions responded by sponsoring legislation this year that make fast food companies like McDonald’s liable for any misdeeds of their mostly independent franchise operators in the state. Democratic lawmakers also restored funding to the Industrial Welfare Commission, a long-dormant state agency that has the power to set wage and workplace standards for multiple industries.
Both of those moves alarmed the business groups. They agreed to withdraw their referendum and to increase the minimum wage in exchange for labor unions dropping both of those issues.
“This agreement protects local restaurant owners from significant threats that would have made it difficult to continue to operate in California,” said Sean Kennedy, executive vice president for public affairs for the National Restaurant Association.
The bill must still be approved by the Democratic-controlled state Legislature and signed into law by Newsom. If passed and signed, the bill can only take effect if the restaurant groups pull their referendum from the ballot. In the past, a referendum couldn’t be removed from the ballot, but Newsom signed a law last week allowing it.
The $20 hourly wage would be a starting point. The nine-member Fast Food Council, which would include representatives from the restaurant industry and labor, would have the power to increase that minimum wage each year by up to 3.5% or the change in the U.S. consumer price index for urban wage earners and clerical workers, whichever is lower.
Reporter Olga R. Rodriguez contributed from San Francisco.