California workers to see wages increase to $20-an-hour

SAN DIEGO, Calif. (NBC, KYMA/KECY) - Beginning Monday, about 500,000 workers in California will see their wages increase as a new $20-an-hour minimum wage for fast-food employees goes into effect.

Alan Gin, an economics professor at the University of California (UC) San Diego, spoke about the potential impact this will have on consumers and the job market.

"That's higher than the states minimum wage, which at this point is over $16 per hour, so it gives a boost to workers in the fast food industry," Gin said.

Gin says the boost may come with a price tag adding, "I've seen estimates where this might increase the cost of fast food of about 5%. So, a combo that used to cost $10 would rise by about 50 cents."

A losing battle

Gin says wages need to keep up with inflation while Kim Phan, the co-owner of the Crab Hut, says that's a losing battle.

"I think everybody deserve to have a healthy living wage. But at the same time, we have to kind of review and look at the big picture because we've been increasing minimum wage for the past few years and has it been helping anyone."

Kim Phan, co-owner of Crab Hut

Gin disagrees and says raising the minimum wage will allow workers to not only get more money in their pockets, but also deal with other expenses like housing.

"That will give people in that industry more money, and it will help them deal with the cost of living here in San Diego and in the state of California," Gin expressed.

Split

Despite this, economists say they're split on if this will lead to fewer job openings in the fast-food industry.

"The initial thought was that raising the minimum wage would lead to a reduction in employment, but there are now studies on both sides of the issue some that say that it will have an impact and others that say it won't."

Alan Gin, Ph.D., University of San Diego Economics Professor

Gin says this increase will not lead to a cycle where the cost of everything increase. Instead, he believes bumping minimum wage will have ripple effects on wages in the rest of the labor market.

"I think it could impact all industries not only other restaurants, but businesses outside restaurant industry because the labor market is competitive. It's still a tight labor market and companies are having difficulties finding employees, so if fast food is paying $20 an hour, other restaurants are going to have to at least match that, and people outside the restaurant industry will have to up their wages."

Alan Gin, Ph.D., University of San Diego Economics Professor

The full pay increase is immediate and will not be phased in. Right now, it only impacts establishments that have at least 60 locations nationwide.