California Minimum Wage Workers Demand $20 Wage Increase

By: Alex Trent | Published: Jun 05, 2024

Many fast-food and healthcare workers in California now make a minimum of $20 an hour after a new wage increase went into effect on April 1st, signed into law by Governor Gavin Newsom last year.

Now, one month into the wage bump, other workers want a taste of the pay increase too, feeling they also deserve more money.

Prices Rising

California workers are watching wage increases for their peers in other industries while they are stuck at a lower tier, paying for the same inflated prices on goods as everyone else. 

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The minimum wage in California is $16 an hour for most workers, a full $4 less than what those working in certain industries like fast food are able to make.


California Inflation

This division in minimum wage creates a sore spot for some in the midst of soaring prices of consumer goods in California.

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A California Legislative Analyst’s Office analysis from March found that prices have grown about 20% in the state since 2020. Inflation levels in California are higher than the average rate in the rest of the country.

Fast Food Price Increase

While raising the minimum wage sounds like a good way to empower workers, the increased wage has to come from somewhere.

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According to the San Diego Union-Tribune, California’s fast-food prices rose 7% just before the new $20 minimum wage took place and California full-service restaurants have raised prices by 3.3% in the past six months.

The Fast Food Council

The minimum wage increases for fast food workers have led to the creation of the fast food council.

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This is composed of industry representatives and restaurant workers, who have been authorized to hike this wage further by 3.5% annually based on inflation. They can also advise on health and safety standards and deal with issues such as wage theft.

Other Workers Want In

Stephon Harris works at a grocery making $16.35 an hour and told the Los Angeles Times he wants in on the wage increase too.

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“I would like to make that,” Harris said of the $20 minimum wage. “Sixteen dollars an hour is definitely not enough if you’re trying to support a family.”


Californians Want $30 for Minimum Wage

Due to the recent minimum wage increases for fast food workers and the rising cost of living, Californian minimum wage workers are wanting an increase to $30 per hour.

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This comes after union and labor groups have suggested that an increase to $20 an hour isn’t enough for people to live off.


Workers Deserving Wages

As workers look at the privileged wages of other workers, many are asking why they don’t deserve the same pay as well.

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“Clearly, the Legislature understands that some workers deserve $20, so they must understand that everybody deserves $20,” said Saru Jayaraman, president of One Fair Wage, a national organization calling for higher salaries in the service sector.


Labor Reshuffle

The increased wage for fast food workers is tempting many in other industries who are paid less to leave their jobs to go work in fast food or healthcare.

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Child-care providers, school staff, retail workers, and restaurant workers bring in some of the lowest wages in California, and there may be an exodus to $ 20-an-hour jobs that could increase staffing shortages in other industries.


The Minimum Wage Sector Crisis

Minimum-wage workers leaving their jobs in favor of those that got a pay rise are creating a crisis in the sector. This is leading to major staffing crises, which is why all of the other minimum-wage jobs should also receive an increase.

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If this doesn’t happen, especially if it doesn’t happen soon, more staff are going to leave these sectors and bosses are going to struggle to come up with ways to retain and hire staff.


Can’t Afford to Live on Lower Wages

As high levels of inflation and economic woes left over from the pandemic loom large over people’s heads, a once radical idea of continually raising the minimum wage seems attractive to many.

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“There’s no way around raising wages at this moment. People are just saying, ‘I cannot afford to do this anymore,’” Jayaraman said. “If you see every other price go up and the wages have not, you’re going to end up with massive staffing crises in every low-wage sector.”


How Minimum Wage Varies per Californian City

Different cities across California each have different variations of minimum wage, so wages can vastly depend on which city someone lives in.

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West Hollywood currently pays the most at $19.08. However, Oakland pays the least at $16.50. In some places, pay also depends on whether they live in the City or outside it. For example, the city of Los Angeles pays $16.78, whereas the unincorporated county of Los Angeles, in Santa Monica and Malibu, pays $16.90.


Age of Minimum Wage Workers

The age of minimum wage workers varies greatly, but workers who are under 25 and over 50 mostly seem to be working minimum wage jobs.

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29% are under 25, and 27% are aged 50 or older. In comparison, workers aged between 25 and 49 make up between 7% and 12% of minimum wage workers within their age categories.


Ballot Measure

During the general election in November, Californians will be able to vote on an $ 18-an-hour minimum wage proposal.

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If it receives enough yes votes, it will increase the state minimum wage to $18 for all employees by 2026 and will increase the minimum wage annually based on any increase to the cost of living.


Increasing Cost of Living

Although these high minimum wage numbers may be shocking to people in the rest of the country, the cost of living in California is extremely high.

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The current minimum wage in California equals about $33,000 per year, but the cost of living in the state comes out to about $53,082 every year according to federal data.


California Has the Highest State Debt

Out of all the states in the US, California has the highest state debt. This is to the high sum of $21 billion.

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With millions of workers in the Golden State now wanting a minimum wage increase, there are some questions as to how the state is going to manage these increases when it is trying to cut costs.


California Has a Budget Deficit

California’s Governor Gavin Newsom is still trying to determine the state’s budget for the 2024-25 fiscal year. However, the budget is currently running at a deficit worth billions.

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This deficit is currently at $37.9 billion. Newsom is trying to find ways to reduce this benefit, which means cutting down on spending. Raising wages does the opposite of this.


Increased Calls From Unions

Unions are playing a big part in pushing for more wage increases for the workers in the industries they advocate for.

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Last week, unions in San Diego representing hotel workers introduced a campaign to fight for $25 an hour.


No End in Sight

It seems that despite campaigns pushing for specific numbers, there is no number that will put an end to worker wage demands. This has some expressing skepticism about the viability of continually forcing wages higher in the future.

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“We can’t expect the business community to continue to absorb this time and time again,” said Republican Assemblymember Heath Flora. Flora has heard resentment from constituents that they were excluded from the $20 wage hikes because they “don’t have a powerful labor group or lobbyist” backing them up.


The Pros and Cons for Businesses

The cons for many fast food and healthcare businesses now is that the minimum wage increases will likely lead to lower turnover rates for them.

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However, there are also some pros. For example, these businesses will be able to see an increase in the number of employees they have, especially the ones who want to stay.


Businesses Can’t Afford the Extra Costs

Businesses are finding issues with the minimum wage increases. Even if they want to pay their workers a fair wage (especially one that has to comply with the law), they can’t afford it.

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While workers may not struggle as much as they once were with new wage increases, it will leave businesses struggling.


Workers Have Already Been Laid Off

Californian workers are already seeing some layoffs due to the minimum wage price hikes.

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Two Pizza Hut franchises in California laid off more than 1,000 delivery drivers. They are now relying on individually contracted delivery drivers to do their jobs instead.


Most Layoffs Have Come from Pizza Restaurants

Pizza Hut isn’t the only restaurant that has laid off workers; Excalibur Pizza has done the same. This shows that pizza restaurants are currently laying off most people.

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In April 2024, Excalibur Pizza, which is a franchisee of Round Table Pizza, laid off 73 delivery jobs, which make up 21% of its workforce. This also shows that delivery drivers seem to be the ones taking the brunt of the layoffs.


Minimum Wage Hikes Are Bad News for California Workers

While an increase in minimum wage might come across as a good thing, it is actually bad news for Californians as it will likely lead to mass layoffs and a reduction in the amount of hours people are offered to work.

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This will only increase the amount of people who are unemployed in the Golden State, and offers increased pressures for those trying to afford to live here.


Sector-Specific Impacts

As California introduces higher minimum wages, various sectors are forced to adapt, reshaping their operational strategies. The technology, agriculture, and manufacturing sectors each face unique challenges and opportunities.

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This adaptation is crucial for maintaining competitiveness and profitability in a state known for its diverse economy.


Impact on the Technology Sector

In the technology sector, companies are increasingly turning to automation as a response to rising labor costs. The integration of AI and robotics is not just a trend but a necessity to maintain efficiency and manage expenses.

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The shift is particularly evident in Silicon Valley, where tech giants are leading the way in adopting these advanced technologies, setting a precedent that could spread across other industries.


Impact on the Agriculture Sector

California’s agriculture sector, heavily reliant on manual labor, faces significant challenges with the wage increase. Farmers are exploring automated solutions like robotic harvesters and drone monitoring systems to reduce dependence on human labor.

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These changes are critical in maintaining the delicate balance between productivity and cost, ensuring that California remains a leading agricultural state.


Impact on the Manufacturing Sector

The manufacturing sector in California is seeing a reshuffle as companies evaluate the cost benefits of automation versus offshoring.

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With increased wages, there’s a growing inclination towards using automated assembly lines to cut costs and improve precision. This evolution in manufacturing techniques could redefine the sector’s role in California’s economy.


Consumer Behavior

Rising wages in California are expected to alter consumer behavior significantly. With more disposable income, consumers might increase spending, yet simultaneously, they may face higher prices across various services and goods.

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The potential shift in consumer behavior could impact businesses’ pricing strategies, supply and demand dynamics, and overall economic stability.


Increased Disposable Income

With the recent wage increase, Californians are experiencing higher disposable income, which could lead to enhanced spending on both necessities and luxuries. Retail sectors are anticipating a surge in sales, particularly in electronics and fashion.

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This increase is a welcome change for businesses but also poses questions about long-term consumer spending sustainability.


Price Sensitivity and Spending Cuts

Despite higher wages, Californians are becoming increasingly sensitive to prices, particularly in essential goods such as groceries and housing.

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This sensitivity is prompting a more cautious approach to spending, with many opting for budget brands or discount options.


Educational Opportunities

The rise in minimum wage is influencing Californians’ educational and career choices.

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More individuals are considering vocational training and higher education paths that align with industries offering higher wages.


Rise in Vocational Training

Vocational training programs are seeing a spike in enrollment as more Californians pursue careers in high-wage industries.

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Technical schools offering courses in healthcare, technology, and skilled trades are particularly popular, reflecting the job market’s demands. This trend shows a shift towards practical, employment-oriented education.


Shifts in Higher Education

Higher education in California is adjusting to the new economic reality. There’s a notable increase in enrollment for STEM fields and healthcare, driven by the promise of higher starting wages.

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Universities and colleges are adapting their curricula to meet this demand, focusing on degrees that offer a clear path to financial stability.


Future of California’s Economy

As wage increases ripple through California’s economy, it’s crucial to consider the long-term implications.

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While higher wages can provide immediate relief for low-income workers, there is concern that businesses may struggle to keep up with rising labor costs. There’s also the risk of wage inflation, where prices increase to match higher wages, leading to a cycle of continuous increases.


Economic Forecasts and Scenarios

Economic experts are forecasting mixed outcomes for California’s economy following the wage increases. Some predict robust growth driven by higher consumer spending and economic activity, while others caution about potential job losses due to automation and business closures.

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This complex scenario presents a critical moment for policy-makers and business leaders as they navigate these uncertain waters.