Less so for consumers of fast food, who will undoubtedly pay more for their burgers, tacos and fried chicken. David Neumark, a minimum-wage expert at UC Irvine, estimated that overall prices will rise between 2.5% and 3.75%.

That’s relatively small, but comes on top of the steep inflation that customers have faced at fast-food establishments in the last few years. Nationally, prices at limited-service restaurants are up almost 30% from February 2020 levels, according to the Bureau of Labor Statistics. And more fast-food price increases will hit lower-income households harder because they spend a larger share of their income on food and consume disproportionately more fast food.

A spokesperson for McDonald’s said the company was exploring several ways to counterbalance the increase in labor costs and has yet to decide how much it will raise the price of menu items. Although McDonald’s provides “informed pricing recommendations,” the spokesperson noted that final pricing is at the discretion of franchisees.

Starbucks said it had elected to raise the pay floor for all levels of employees in California to retain workers and to combat wage compression — when there is little difference in pay between experienced workers and entry-level ones. It plans to offset the increased labor expenditure “through a variety of levers — including near-term pricing as well as other efficiencies,” a spokesperson said.

The economic effects of such a sharp and sudden pay hike are unclear. In general, raising the minimum wage helps large swaths of low-wage workers, bringing some out of poverty, but others will lose out as employers scale back through layoffs, shorter shifts, reduced hiring and other cost-saving measures.

“Where they can automate, they will automate more,” Holzer said. “Maybe some franchises will move out of state.”

The COVID-19 pandemic has already spurred more fast-food operators to install self-service ordering kiosks, and the industry is looking at other ways to depend less on human labor, including the use of robots.

Proponents of the new law say fast-food corporations can afford to pay up. The industry has flourished since the pandemic began as customers sought cheap and quick meals, leading to billions in sales and record profits.

But the brands say they, too, have had to contend with high inflation for ingredients and supplies and have already raised wages for their workers without government prompting. Between 2019 and 2022, the average weekly wage for employees at limited-service restaurants jumped 26% to $501.

Franchise owners in particular are anxious about their ability to shoulder the extra costs; labor accounts for roughly a third of a typical fast-food operator’s expenses.

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