Fast-food wage rises to $20 starting April 1, business owners voice concerns

On April 1, the minimum wage for fast food workers in California will increase to $20 per hour, and the Korean-American food industry is already grappling with the potential aftermath.

Directly affected Korean-American restaurants and markets are concerned about several issues: a domino effect of the minimum wage increase; a worsening labor shortage; a potential reduction in labor costs through the use of machines or kiosks; an economic impact from companies moving out of the country; and an increase in the cost of living, including eating out.

This year, Korean-American restaurant owners have been struggling to pay for delivery vehicle insurance, workers’ compensation, unemployment insurance, and rising food prices. If the minimum wage for fast food workers rises to $20 per hour, their employees will likely demand higher wages as well.

“The business environment has worsened further, as prices have increased due to the shortage of pork supply due to the implementation of California’s animal welfare law, and food prices have also risen due to the ban on Russian products to the U.S.,” said Jonggeum Lee, CEO of Song Yi Catering.

“When the job market was good for a while, there was a shortage of workers, so some restaurants introduced kiosks,” said a restaurant industry insider, adding, “Now, it is because of the labor costs.”

Fluctuations in the labor market in the Korean-American restaurant industry also affect grocery stores, as employees may move to the restaurant industry in search of higher wages.

“It’s not easy to find someone to work in the butchery and fishery departments, even if they guarantee full-time and overtime work,” said a Korean market official, adding, “I’m worried that the increase in fast food wages will make it harder to find employees in general.”

Since the pandemic, Korean-American retailers have seen a rapid loss of younger-generation employees in customer service and cashier positions.

“If you look at the recent cashiers of Korean-American retailers, most of them are middle-aged or older,” said a retail general manager in Koreatown. “Young people are flocking to restaurants like K-bbq restaurants, where wages and tips are usually better, and the fast-food wage hike will set off a domino effect of wage increases in the industry.”

Labor law experts predict that the minimum hourly wage increase will eventually spread to the entire industry.

“The fast food wage hike will have a greater impact on non-tipped employees than on tipped dine-in restaurant workers,” said Sooyoung Park, a labor lawyer, “If you can’t match the increase right away, it’s a good idea to have a personal interview with your employees to consider additional benefits, such as promotion opportunities.”

The fast-food industry is expected to fight back with menu price increases, possibly further increasing the cost of dining out for consumers.

The National Restaurant Association (NRA) said, “When the minimum wage rises significantly all at once, the burden of labor costs impacts operations, forcing some companies to reduce staff, close stores, or raise food prices.”

Economists also believe that fast food wage increases in California, where the cost of living is skyrocketing, will spread across the industry, accelerating layoffs, industry automation, and company exodus.

Pizza Hut in Southern California shut down its delivery service, resulting in 1,200 job losses. On March 26, Roundtable also announced plans to lay off 1280 delivery workers.

When the fast-food wage law (AB 1228) goes into effect, fast-food business companies with 60 or more locations must raise the minimum wage of their employees to $20 per hour. This is 25% higher than the current state minimum wage of $16.

BY EUNYOUNG LEE, HOONSIK WOO    [lee.eunyoung6@koreadaily.com]