The law, passed by Democrats in the state Legislature last year, recognizes that the majority of fast food workers are not teenagers earning extra spending money, but rather adults supporting their families.

The legislation has been widely supported by the trade association representing fast food franchise owners. However, since its passage, many franchise owners have expressed concerns about the impact the law will have on their businesses, particularly amidst California's slowing economy. The rising labor costs, estimated to be around $470,000 per year for some owners, are forcing them to consider raising prices by 5% to 15% across their stores.

Alex Johnson, the owner of ten Auntie Anne's Pretzels and Cinnabon restaurants in the San Francisco Bay Area, has already witnessed a decline in sales in 2024, prompting him to lay off office staff and rely on parental assistance for payroll and human resources. Johnson is no longer seeking to open new locations in California and fears that he may even have to sell or close his business due to the thin profit margins.

Despite concerns voiced by franchise owners, the evidence from the past decade in California suggests that minimum wage increases have not led to job losses. Michael Reich, a labor economics professor at the University of California-Berkeley, stated that wage hikes have resulted in positive employment effects, contrary to fears of disemployment. Furthermore, many larger cities in the state already have higher local minimum wage laws in place, making the jump to $20 per hour less significant for many fast food restaurants.

The $20 minimum wage legislation reflects a carefully negotiated compromise between the fast food industry and labor unions, who have been at odds over wages, benefits, and legal liabilities for nearly two years. The law applies to fast food establishments without table service, belonging to national chains with at least 60 locations nationwide. Restaurants operating within grocery establishments and those exclusively selling bread as a standalone item are exempted.

An exemption initially appeared to apply to Panera Bread restaurants, benefitting wealthy campaign donor Greg Flynn. However, the Newsom administration clarified that Panera Bread is not exempt as it does not produce dough on-site. Notably, Flynn himself announced that he would pay his workers at least $20 per hour in compliance with the law.

As the $20 minimum wage comes into effect, it is expected to provide much-needed financial security for fast food workers in California. However, concerns remain about potential price increases and the impact on franchise owners who may face difficult choices in the face of rising costs.