As California rolls out a significant minimum wage increase for fast food workers, business owners like Kerri Harper-Howie, who owns 21 McDonald’s franchises, are caught in the middle of a challenging economic adjustment. Starting April 1, the state’s new law will bump the minimum wage for hundreds of thousands of fast food workers to $20 an hour, a $4 increase from the current rate. This change comes as a result of Assembly Bill 1228, a move that while aimed at helping lower-income workers, places a heavy burden on franchisees like Harper-Howie.
Harper-Howie, in a recent interview with KTLA 5 News, expressed her frustrations, not with the concept of raising wages, but with the selective application of the new law. “We, as business owners, are not opposed to minimum wage increases,” she told KTLA. “One of our primary objections is that this wage increase only applies to us. Why isn’t everyone getting an increase if, fundamentally, [the current] wage is not adequate for people to live? Who then are the customers that are going to be able to afford to pay for our food?”
The bill was authored by Assemblymember Chris Holden (D-Pasadena) and is part of a broader discussion on workers’ rights and the responsibilities of fast-food franchisees. The final $20 rate was set after negotiations between the Service Employees International Union and the California Restaurant Association. This decision comes in the wake of widespread labor actions driven by inflation and the rising cost of living, which have become more pressing since the COVID-19 pandemic ended. Many agree that the state’s previous minimum wage of $16 per hour is insufficient for managing the high cost of living, particularly in California’s urban areas.
Holden highlighted the human impact of the wage increase when Governor Gavin Newsom signed the bill in September 2023. “We did not just raise the minimum wage to $20 an hour for fast food workers,” Holden stated. “We helped a father or mother feed their children, we helped a student put gas in their car, and helped a grandparent get their grandchild a birthday gift.”
Despite the positive spin from politicians, franchise owners like Harper-Howie are feeling left out of the conversation. “At the end of the day, this law came to pass as a result of negotiations. We were not a part of those negotiations. We did not feel as though we had someone in the room, and we certainly would have advocated differently on our behalf,” Harper-Howie lamented.
The implementation of AB 1228 represents a fundamental shift in how minimum wage laws affect different sectors of the economy, singling out fast food franchisees for a substantial wage increase that does not apply to other industries. This selective application has led to concerns among franchise owners about their ability to adjust without compromising their business operations. With higher labor costs, franchisees are forced to consider raising prices, a move that could alienate customers and reduce sales, particularly in a competitive market where price sensitivity is high.
The broader economic implications are also significant. As wages rise, so too does the general cost of living, potentially leading to a cycle where even $20 per hour becomes insufficient. This raises questions about the long-term sustainability of such sector-specific wage increases and whether they truly address the root causes of income inequality and economic hardship, or merely shift the burden onto small business owners like Harper-Howie.
As California navigates these changes, the experiences of business owners like Harper-Howie will be critical in assessing the real-world impacts of legislative actions on both workers and employers. The hope is that a balance can be found that genuinely uplifts workers without undermining the businesses that employ them. For now, franchise owners are bracing for the impact, hoping that their concerns will eventually be heard and addressed in a manner that fosters both economic growth and worker prosperity.
