Half a million California workers will get $20 minimum wage, starting today It's a big win for cooks, cashiers and other fast-food employees, among the least paid in the workforce. Restaurant owners and franchisees warn of higher prices and cuts to workers' hours.

Half a million California workers will get $20 minimum wage, starting today

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A MARTÍNEZ, HOST:

Here in California, many fast-food workers are getting a big raise today.

MICHEL MARTIN, HOST:

Their minimum wage is going up to $20 an hour. That's because of a new state law passed last year, based on a deal between labor and restaurant groups.

MARTÍNEZ: NPR business correspondent Alina Selyukh has been talking to restaurant owners and workers. So, Alina, the statewide minimum wage in California is $16 an hour, though in some cities and counties, it's above 18. So how big of a deal could this raise be for workers?

ALINA SELYUKH: You know, talking to workers, they say it's pretty huge, but also not quite a windfall. California is one of the most expensive states to live in, but half a million Californians are estimated to work as cooks, cashiers, baristas and other fast-food jobs. Most of them are women, immigrants, people of color. Many live below poverty line. And generally, fast food jobs are among the lowest paid in the U.S. Wages there have stagnated for decades. I spoke with McDonald's worker Jaylene Loubet. She's in school now, so working part-time, and she's supporting her parents, who are facing medical troubles. Her last wage was just over $17 an hour.

JAYLENE LOUBET: There are some days where I'd struggle to put cents together to put food on the table, but I feel like with just a couple more dollars, I have a little bit more of a wiggle room there. People need to realize that $20 compared to the cost of living in Los Angeles, it's still not enough to feel secure.

SELYUKH: She'd love to feel secure. Loubet shares a one-bedroom apartment with her parents, so she hopes to use her raise to start saving toward a bigger home or at least to, you know, stress a bit less about bills.

MARTÍNEZ: Sure. Now, what about the restaurant owners? Those higher wages have to be paid, one way or another.

SELYUKH: Yes, and they're worried. So this only affects fast food, mainly big chains like McDonald's, Subway, Starbucks, Chipotle. But the people most vocal on this are local franchisees. You know, folks maybe own 100 locations, but maybe they own just two locations. I spoke with Michaela Mendelsohn. She has six locations of El Pollo Loco, and she tried to pre-emptively raise prices 3-4% but lost customers.

MICHAELA MENDELSOHN: People are pushing back on higher prices. We don't have nearly the margins to pay for this change, and the only way to survive is to get more efficient, to reduce labor hours. And, you know, I hate saying that.

SELYUKH: More efficient can mean, you know, simpler menus or more automation. We did see hundreds of Pizza Hut delivery drivers get laid off ahead of the wage increase. But mostly, restaurant owners talk about raising prices and cutting workers' hours.

MARTÍNEZ: Now, Alina, whenever there's a hike in the minimum wage, whether it's federal, state, or local, there's always a debate over how people and businesses are affected. Any history at all to hint how all that might play out?

SELYUKH: There's one example that's been studied a fair amount, and that's a minimum wage hike in Seattle about a decade ago. And researchers there found that overall, restaurants adjusted and adapted. Workers generally didn't lose jobs, but they did lose hours. Many lost hours. Still, overall, they came out making more money in the end. Now, California will be the new big case study for all this. And, of course, California often sets the tone for other states on labor, and advocates hope for exactly that on higher minimum pay.

MARTÍNEZ: That's NPR's Alina Selyukh. Alina, thank you very much.

SELYUKH: Thank you.

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