California’s minimum wage will increase 30% from $16 to $20 for fast-food employees on April 1, causing restaurants to adjust in other ways.
Dr. Adele Harrison, professor of finance, explained what led to the rise in wages.
“The unions were pushing for a bigger pay rise for the fast-food workers,” Harrison said. “The owners and unions weren’t coming up with an agreement. The state of California stepped in, causing the employers to cave and say they’d raise the money to $20.”
With this rise, Pizza Hut has changed one of its ordering features by deciding to end all delivery services in California. This change is projected to result in the layoffs more than 1,200 delivery drivers.
“Every time they raise the minimum wage, unemployment increases by five to 10%.”
Dr. Adele Harrison, professor of finance
Harrison discussed why things like layoffs occur as a result of the increase in minimum wage and the possible implications. She also mentioned how, with the history of every increase, there usually is a detrimental impact on low-skilled people overall and people of color.
“As happened in the past, every time they raise the minimum wage, two things happen: employers either reduce hours or don’t bring on new people and prices always go up,” Harrison said. “It depends on whose shoes you are in, but the overall impact on the economy will be negative. Every time they raise the minimum wage, unemployment increases by 5 to 10%.”
A federal WARN Act notice states the company has decided to eliminate first-party delivery services, eliminating all delivery driver positions so customers must use third-party apps like DoorDash or Uber Eats to get their pizza.
A few CBU students expressed their opinions on the fast-food pay raise and how it is a positive outcome for workers and said they don’t mind the delivery option at Pizza Hut going away.
Janira Hernandez, freshman biology major, said she never used the Pizza Hut delivery feature before and doesn’t plan on using a third party to do so. She also expressed her thoughts on the minimum wage rising in general.
“My thoughts on fast food minimum wage rising to $20 an hour is that it is beneficial for the workers and it should be done because some of these fast food companies are multi-million dollar companies,” Hernandez said. “On behalf of the employees, everyone has their struggles. Many employees don’t have other options but to work at fast food, depending on background and more.”
Valerie Luevano, freshman pre-nursing student, said she also found the raise beneficial for fast-food workers.
“The fast-food minimum wage rising to $20 an hour is great,” Luevano said. “Working in fast food has its ups and downs, but it’s a job that someone may need just to survive day by day.”
Other effects of the increase in minimum wage include McDonald’s and Chipotle announcing an uptick in menu prices, according to Kelly McCarthy for ABC News.
The impact of the raise on the overall economy is to be determined.
