ARI SHAPIRO, HOST:
Nearly half a million food workers in California start earning at least $20 an hour today. That is up from a statewide average of $16. That raise makes it the highest minimum wage in the nation for this industry. It's a big win for the unions that pushed for this last year, but there are concerns about the impact on small business owners, consumers and even some food workers themselves. KQED's Rachael Myrow joins us from San Francisco. Hey, Rachael.
RACHAEL MYROW, BYLINE: Hey there, Ari.
SHAPIRO: This minimum wage increase is not for all workers in California, just some of them. So tell us more about who's included.
MYROW: Today's wage hike is specifically targeted at what are called limited service restaurants with more than 60 establishments nationwide. What's a limited service restaurant? A restaurant without waiters. So you can dine in, but you'd be ordering and picking up your meal at the counter. And most of us think of fast food restaurants when we think of this category. I should mention, though, Ari, you know, fast food often runs on a franchise model, which is to say, in many cases, it won't be the national chain that's going to be paying workers more. It'll be the small franchise owner who pays fees to the chain to represent the brand.
SHAPIRO: And some of those owners, as we said, are concerned. What are they telling you?
MYROW: They are very nervous about this. Many of them tend to operate on slim profit margins. The International Franchise Association says a hike in operating costs could make it a struggle for some of these franchises to survive. So take Brian Hom, for example. He owns two Vitality Bowls franchises in San Jose, Calif., that offer acai bowls, salads, smoothies. Hom says he's already raised menu prices 5% to 10% and cut hours for some of his 30 employees.
BRIAN HOM: Where I was running, like, four or three people would cut down to two, you know, because already we know that we've got to be prepared to run lean.
MYROW: Now, this is Day 1 of the new minimum wage. So he says he's going to have to wait and see how it all plays out. Meanwhile, union leaders who pushed for the higher wages say top fast food corporations make billions of dollars a year and they could choose to absorb these higher labor costs, perhaps by reducing the fees they charge franchisees. But so far, no sign of that.
SHAPIRO: Well, what are the workers telling you?
MYROW: Many workers and fast food are treating the wage hike as a mixed blessing, like Sandra Jauregui. She works the fryer, drive thru and grill at a Jack in the Box in Sacramento. On the one hand, she says, making $20 an hour will definitely help her raise the three grandchildren she has custody of.
SANDRA JAUREGUI: (Speaking Spanish).
MYROW: It's super-good, she says, but does go on to add that her boss told her he might cut the hours of her colleagues, and she's worried about that.
SHAPIRO: Is it likely that this wage hike in California will inspire changes across the U.S.?
MYROW: Probably not at the national level. The federal minimum wage of $7.25 hasn't been raised since 2009. So a lot of the push for raises has shifted to cities, counties and states. And this could be a model for some of those. One last thing, Ari. Today's minimum wage hike isn't the only one coming to California in the near future. On June 1, some health care workers will get $23 an hour to start.
SHAPIRO: That is KQED's Rachael Myrow. Thanks for your reporting.
MYROW: Thank you. Transcript provided by NPR, Copyright NPR.
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