California fast-food businesses prepare for minimum wage increase in 2023

LOS ANGELES (KABC) -- With California's minimum wage set to increase on Jan. 1 to $15.50 per hour, the fast-food industry is bracing for possible changes.

"Employers are facing higher rents, higher wage costs, high regulatory costs, so it's very difficult for businesses to do business in this state," said Ken Miller, a professor at Claremont McKenna College.

The fast food industry also faces another big change. A new law, AB 257, pushed by unions establishes a council that can regulate wages, hours and other working conditions.

"The bill gives fast-food cooks and cashiers the power to raise the industry-wide minimum wage to up to $22/hr," SEIU said in a statement. "Similar to the state minimum wage, the industry minimum wage would adjust annually based on the Consumer Price Index."

"As employers adapt to higher wage structure, they're going to increasingly try to reduce their cost by reducing the headcount of their workforce and try to automate to the extent that they can," Miller said.

Union officials say the council would include government officials, workers, franchise owners and corporate representatives.

"The workers will actually be at the table with franchise owners, business owners, legislators, labor to solve these issues," said David Green with SEIU Local 721.

But some businesses could decide it's too expensive to stay in California.

"California now at $15.50 is more than double Texas, Utah, Idaho, some other competing states," Miller said. "If they can pick up and move a lot of them are saying, 'Why should we do business in this state if we can do it more cheaply someplace else.'"

There is now a petition to block AB 257.

If there are enough signatures that could go in the ballot in 2024.