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Checking in on fast food workers and franchise owners after a month of wage increase

ARI SHAPIRO, HOST:

It's been more than a month since California started requiring most fast food employees to be paid at least $20 an hour. That's a big jump from the state's $16 minimum wage. From member station KQED, Farida Jhabvala Romero has an update on how it's going.

FARIDA JHABVALA ROMERO, BYLINE: When Karina Ceballos got her first paycheck with the wage hike, she felt a huge wave of relief. She works two fast food jobs near Oakland and says the extra 400 or so dollars a month make it much easier to afford rent and healthier food. The fridge in her apartment is now packed with fresh vegetables, fruits and meat for her kids, which she says she couldn't buy much of before.

KARINA CEBALLOS: (Speaking Spanish).

ROMERO: Ceballos marched and advocated for the wage increase. The single mom says now she has more peace of mind and room to breathe financially.

CEBALLOS: (Speaking Spanish).

ROMERO: But other fast food workers say they've actually lost income because employers have cut staff hours to deal with the higher labor costs. Alejandra Aguilar Perez works at a Taco Bell in downtown LA. She says her shift went from full time to about half time last month.

ALEJANDRA AGUILAR PEREZ: It's very bad. Like, I've been struggling. It's hard to pay bills. It's hard to pay rent.

ROMERO: She's looking for a second job, but she hopes that the industry will stabilize soon.

AGUILAR PEREZ: The bosses right now are mad, but eventually they're going to get used to it. They're going to have to give in, and they're going to have to give us our hours.

ROMERO: Brian Hom is one of those bosses. He owns two Vitality Bowls franchise shops in San Jose that sells salads and acai bowls with strawberries and bananas. Most fast food restaurants in California are franchises, meaning it's often small- and medium-sized business owners who pay fees to corporations to represent their brand. Hom cut worker hours and raised menu prices.

BRIAN HOM: I'm happy for my employees getting the $20 minimum wage, but they know that if we can't continue having good sales because of the price increases, you know, they may not have a job.

ROMERO: He says he won't know until he gets his bookkeeper's report later this month whether sales have actually gone down. But some customers have told him prices are too high. He doesn't anticipate restoring staff hours anytime soon.

HOM: I've talked to my wife about that. If things get really bad, we, you know, close the business.

ROMERO: The California Restaurant Association, which represents some franchise owners, emailed a statement to KQED saying that early feedback from their members suggests the wage hike has become a, quote, "breaking point" for some. But economist Michael Reich at UC Berkeley says it's hard to figure out exactly the impact the new minimum wage is having because there are other factors at play. He says even before this, more companies had started using self-order kiosks to save on labor costs, plus inflation.

MICHAEL REICH: Cost of food has gone up by 20-something percent in the last three years. So that's another reason that prices have been going up. It doesn't mean the minimum wage has caused the price increase.

ROMERO: His research showed that a previous minimum wage increase in California raised menu prices at fast food restaurants but didn't hurt employment. He says this increase may have an industry-wide impact on both those things, but it's too early to say. For NPR News, I'm Farida Jhabvala Romero in Oakland, Calif.

(SOUNDBITE OF AMIE BLU SONG, "EVERYTHING ABOUT HER") Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Farida Jhabvala Romero / KQED
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