Guac is now more extra… Chipotle and McDonald’s plans to hike prices in California to keep up with the Golden State’s rising minimum wage. In September, Gov. Newsom signed a bill that’ll hike fast-food workers’ minimum hourly wage to $20 starting in April. That’ll make the state’s fast-food workers the highest paid in their industry nationwide.
Burrito bowl: Chipotle currently pays its California employees $17/hour, but its CFO said the chain would “definitely” pass the $3 increase on to customers as “a mid- to high-single-digit price increase.”
Golden Arches: McDonald’s embraced the new minimum because it replaced legislation that would’ve formed gov’t-appointed councils to oversee the fast-food industry.
Raisin’ the fryer floor… Even before this planned supersized increase, CA’s minimum wage was one of the highest in the US at $15.50/hour. But McD’s birthplace is far from alone in raising its minimum wage: 30 states + DC have higher hourly minimums than the federal standard, which has been stuck at $7.25 since 2009 (despite inflation). In states where the federal minimum isn’t already overwritten by local law, some business owners say they’ve raised wages anyway, to attract workers in a hot labor market.
Wages and prices form a flywheel… When wages go up, prices tend to rise, and when prices go up, wage increases may follow, so that people can afford those higher prices. Case in point: 19 states + DC tie their minimum-wage increases to inflation, but two of those states plan to stall hikes if unemployment gets too high. Critics of CA’s pay increase say it could lead to layoffs and automation, which… Chipotle did just make a robot that builds bowls and salads (👀).