California Fast Food Workers to Earn $20/hr Starting April 1: Insights from Economist David Smith

California's fast food industry is on the brink of transformation as the state recently implemented a $20 an hour minimum wage for fast food workers, effective April 1. This monumental change hailed as the highest in the nation for the industry, prompts scrutiny from economists like David Smith.

Smith, an esteemed economist and Pepperdine Graziadio faculty member, highlights the potential challenges individual franchise owners may face in absorbing the increased labor costs, particularly in the aftermath of the COVID-19 pandemic. While larger corporations may have greater capacity to manage these expenses across their company-owned stores, Smith underscores the potential hurdles for smaller franchisees.

"Coming out of COVID, restaurants and small business owners have had a challenging time in many cases, making ends meet," Smith notes. "Adapting to consumer changes in preferences about where they eat, this [wage increase] could potentially serve as another hurdle for them."

Smith's insights shed light on the delicate balance between supporting workers' rights and ensuring the sustainability of small businesses within the fast food industry. As California embarks on this groundbreaking policy shift, Smith's perspective underscores the importance of considering the broader economic implications and challenges that lie ahead for both workers and business owners alike.

Read the full article here.