In today's lesson, we'll explore a real-world economic event from California, USA. On April 1, 2024, a new law raised the minimum hourly pay for workers at large fast-food chains to $20. This change has sparked a big debate. Some see it as a necessary step toward a fair wage, while others worry it could harm businesses and customers. We will look at the different perspectives, analyze some early data, and debate whether similar changes could work in our own communities.
Hook: Who Pays?
When a company has to pay its workers more, where does the extra money come from? Is it magic? Of course not. With a partner, take two minutes to brainstorm a few possible sources for the money. Think about the company, its products, and its customers.
Listening: The Golden State's Big Change
You are going to watch a short news report about the new law in California. This report captures the initial reactions and concerns when the law was introduced. As you watch, listen for the main idea.
California's $20 Fast-Food Wage
A news report on the immediate effects of the new law. (Associated Press)
Video Transcript
A pay raise for fast food workers in California starts today. More than half a million employees will now earn at least $20 an hour. Some places are planning to raise menu prices to make up for the increase. ABC7 News reporter Lena Howland is live in Livermore with reaction from workers and restaurant owners. [ 00:16 ]
While workers are celebrating this long-awaited pay bump, including those here at Starbucks and Subway, many business owners worry that they may have to raise prices and pass this cost back on to the consumer. [ 00:33 ]
April 1st marks a fresh start for fast food workers across the Golden State, with a new minimum wage of $20 an hour. That's $4 higher than California's general $16 an hour minimum wage. "Even though we are the engine of a billion-dollar industry, too many of us struggle to keep up with rent, our bills, and the rising cost of living." [ 00:55 ]
Angelica Hernandez, a McDonald's worker, has been in the fast food industry for the past 19 years, and she says this will make a big difference in her personal life. "This raise gives us more of a chance to make ends meet, a chance to breathe a little easy, a chance to buy a coffee or maybe take our family to the movies." [ 01:16 ]
The state doubled its minimum wage for most workers over the past decade, despite concerns that it would lead to job loss due to higher expenses. Instead, a new study released by the Roosevelt Institute says wages went up and employment didn't change. "We have a group that raised this minimum wage or had minimum wages that were higher and another group that did not, and they're very comparable before the minimum wages in California start to increase. And we found substantial wage increases, we did not find employment declines." [ 01:47 ]
Tia Koonse, a legal and policy research manager at the UCLA Labor Center, says companies can afford to share the wealth, with 80% of California fast food workers being people of color. "I would argue that surely instead of layoffs, they can share some of those profits with the poorest workers in California, the women of color working two minimum wage jobs, getting her three kids to school on the bus. Surely instead of layoffs, those folks could share their profit." [ 02:16 ]
But at the same time, business owners still worry they'll have to raise prices to offset the costs. "But this bill, AB 1228, has really hit our operations hard. We're no longer hiring, we're not backfilling positions, we're not growing in the state anymore, we're not expanding more locations, and I'm ultimately thinking about selling or closing my business." [ 02:40 ]
And there are some exceptions to this law, including bakeries and those smaller stores found in airports and grocery stores. Live in Livermore, Lena Howland, ABC 7 News. [ 02:56 ]
Think About It
As you watch, consider these questions:
- What is the main change the law introduced?
- Which group of people is generally happy about this change? Why?
- What are some business owners worried about?
Vocabulary: Key Economic Terms
Unlock full access by logging in. Registered users can explore the entire lesson and more.