Not only are wages generally up from year-ago figures given the hot labor market, but minimum wage rates are rising in many states as a result of new laws. These can be a double-whammy to small businesses already dealing with inflationary pressures. At the same time, businesses know they need to pay more to attract top talent.
“It’s a very precarious situation that small businesses find themselves in,” said Steve Hall, vice president of economic development lending at the Local Initiatives Support Corporation, a community development financial institution.
Here are some of the biggest wage hikes set to impact Main Street in the coming year:
California fast-food workers
Beginning on April 1, 2024, California’s minimum wage for the state’s 500,000 fast-food workers will increase to $20 per hour. By comparison, the average hourly wage for fast-food workers in 2022 was $16.21, according to a state release announcing the change, which cites a 2022 research brief from The Shift Project think tank.
Companies like McDonald’s and Chipotle have already said they are likely to raise prices to counteract the impact of the new law.
Chipotle chief financial officer, Jack Hartung, told analysts on a company earnings call that the chain will likely raise prices in California by a “mid-to-high single-digit” percentage. And McDonald’s chief executive Chris Kempczinski told analysts he couldn’t pinpoint the exact amount, but price hikes were likely to ensue.
This targeted food sector increase is separate from California’s hike to its minimum wage, which is rising to $16 in 2024 from $15.50, a 3.2% climb. Some cities and counties in California have higher local minimums.
