April 1 (UPI) — Many fast food workers in California received a pay raise on Monday as the new minimum wage of $20 per hour went into effect, the highest state minimum wage in the country.
The new standard will give a 25% boost to those in the fast-food sector, usually the lowest-paid workers in the country and whose salaries have not grown in decades.
Some restaurant chains have responded by laying off workers. Pizza Hut franchises said in December that it laid off its delivery drivers in favor of using apps like Uber Eats and Door Dash in the face of the increase.
Other companies, like Vitality Bowls, said they have increased their prices from 5% to 10% and are reducing worker hours in a way to pay for the increase.
The Roosevelt Institute, though, said the increase comes as big chains have increased their profit margins and shown solid revenue growth with menu increases that have surpassed inflation.
“Prices have been so much higher than operating costs over the last decade that these companies could just absorb the high operating costs,” Ali Bustamante, of the institute, told CBS News. “This is about raising the floor and making sure that $20 being the new minimum wage puts workers on a better economic footing to cover their household needs.”
The minimum wage increase may not end there. The law that set the new mark also created a new Fast Food Council, which will have the power to increase the minimum wage by up to 3.5% each year through 2029 or to keep up with the consumer price index.
