California raised its minimum wage from $16 to $20-an-hour for any business that has 60 locations or more. So, how's it working out?
Pizza Hut already eliminated delivery drivers and other fast food restaurants are raising their prices. "The money has to come from somewhere," Guy Williams, President of Gulf Coast Bank and Trust, told WWL's Newell Normand.
Franchisees who have just one location may suffer more than the 'mothership' or the big headquarters, Normand noted. "Some are just closing their doors," he said, adding that 1,300 delivery driver jobs have already been eliminated.
If people are more expensive, it gives machinery and automation a boost, usually, Williams said. So, get used to ordering via a touch screen.
"It tilts the playing field against the worker," he said. "The least skilled workers are the ones who get laid off." Workers with limited ability are going to be "priced out of the market and unfortunately aren't going to be able to find a new job," he added.
Many people think the hike will squeeze profits from the rich guy at the top, but in reality, Williams explained, the way franchise systems work, the big corporations at the top don't take the profits and loss, the local owner does.
"They're giving you an opportunity and it's up to you to make money," he said, adding that this pay hike may drive more franchise owners to pull up stakes and choose a different location.