California’s minimum wage hike to $20 per hour was intended to be a boon for fast food workers, but instead, it has wreaked havoc on the industry. With mass layoffs now sweeping through major chains like McDonald’s and Pizza Hut and prices skyrocketing at eateries statewide, the effects of the 25% wage increase have been anything but positive so far.
McDonald’s recently announced they will be letting go of over 1,200 employees across the state. They have also drastically increased the prices of their menu items, with a Big Mac combo now costing around $18.
The price of a McChicken has gone up 33% in the past year alone. These price hikes have made fast food unattainable for many low-income individuals and families.
Pizza Hut is planning to lay off a shocking 1,300 workers in California over the next few months. They claim that in order to pay their employees the new $20 minimum wage, they have no choice but to cut jobs.
Automating certain food preparation procedures is another tactic Pizza Hut is using to avoid raising prices too much.
El Pollo Loco and other chains are following suit, investing in automated systems to reduce overall labor costs.
While automation may save companies money in the long run, massive layoffs are inevitable in the short term. Over half a million fast food workers now make $20 an hour but at the cost of economic security for hundreds of thousands of others.
El Pollo Loco now uses machines to make their fresh salsas and guacamole in-house. The automation allows them to produce the sauces and dips efficiently without needing as many staff.
The company said the changes were made to help offset rising costs from the minimum wage hike, though some employees were let go in the process.
California’s fast food restaurants are being forced to automate certain jobs and implement technology to cut labor costs, as the new $20 minimum wage has gone into effect.
With the 25% increase in pay, many chains can no longer afford to staff as many employees and have had to lay some off.
McDonald’s has doubled down on self-service kiosks, where customers can place orders themselves. The kiosks reduce the number of cashiers needed and speed up the ordering process.
However, some customers complain that the technology makes the experience feel impersonal and prefer interacting with staff. While kiosks likely won’t replace all staff, they signify an ongoing trend of automation in the fast food industry.
The minimum wage law and its fallout have been met with criticism. Business owners argue that they cannot afford the costs and will have to raise prices substantially or cut jobs.
Conservative politicians claim that the consumer will ultimately shoulder the costs. Supporters counter that the law brings people out of poverty and that some job loss was inevitable.
