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
To discuss this topic, we need to understand a few key terms. These words help explain the relationship between wages, prices, and business operations.
| Word | Definition | Example |
|---|---|---|
| minimum wage | The lowest hourly pay that an employer can legally pay a worker. | The federal minimum wage in the U.S. is much lower than California's new sectoral wage. |
| cost of living | The amount of money needed to cover basic expenses such as housing, food, taxes, and healthcare in a certain place. | Workers argued that the old pay rate was not enough to keep up with the high cost of living in California. |
| margin (profit margin) | The difference between the cost of producing something and the price it is sold for. | Restaurant owners complain that their profit margins are very thin, so a wage increase is difficult to absorb. |
| pass-through | The process of a business passing increased costs (like higher wages) directly to the customer in the form of higher prices. | The price of a burger went up, a clear example of cost pass-through from the business to the consumer. |
| turnover (employee turnover) | The rate at which employees leave a company and are replaced by new ones. | Higher wages can sometimes reduce employee turnover because workers are happier and more likely to stay. |
Data Walk: What the Numbers Say
After the initial news reports, researchers at the University of California, Berkeley, analyzed the real-world effects of the new law. In small groups, read and discuss their key findings from February 2025. What story does this data tell?
Key Findings from the UC Berkeley Study
- Wage Increase: After the law, fast-food worker wages increased by an estimated 8 to 9 percent.
- Price Effect: The policy led to very modest price increases. The overall increase was about 1.5 percent, which equals about 6 cents on a four-dollar hamburger.
- Employment Effect: The study's preferred analysis found no significant negative effect on fast-food employment. The number of fast-food restaurants in California also continued to grow after the policy was implemented.
Grammar: Explaining Cause and Effect
When we analyze current events, we often need to explain the connection between actions and their results. We can use specific words and phrases to link a cause (the reason something happens) with an effect (the result).
Cause/Effect Linkers
Due to is followed by a noun or noun phrase. It introduces the cause.
Due to the new law, wages for fast-food workers in California significantly increased.
As a result and Therefore are followed by a clause (subject + verb). They introduce the effect.
The company's labor costs increased. As a result, they passed through a very small price increase to customers.
Many workers have more income. Therefore, they can better afford the high cost of living.
Quantifiers
When discussing data, we use quantifiers to describe amounts and numbers. Notice how they are used with countable nouns (like jobs, workers, restaurants) and uncountable nouns (like money, time, concern).
- Many / Fewer (for countable nouns): Many workers received a raise, but the study found there were not significantly fewer jobs available.
- Much / Less (for uncountable nouns): There was much debate about the law, but the price effect was less than many people expected.
- Some / A lot of (for both): Some people predicted major job losses. The law generated a lot of discussion.
Positions: Choosing a Side
This issue affects different people in different ways. Your teacher will assign your group a perspective: a fast-food worker, a restaurant owner, or a regular customer. With your group, create three clear claims or arguments that support your position on the new $20/hour wage law. Try to use the vocabulary and grammar we just discussed.
Discussion Prompts
- Workers: Why is this wage increase fair and necessary? How does it affect your life?
- Owners: What are the biggest challenges this law creates for your business? Even if jobs weren't cut, how do you handle the increased costs?
- Customers: The price increase was small. Does this change your view of the law? Is it fair?
Debate: A Higher Wage for Our City?
Now, let's apply these ideas to our own context. In your groups, prepare to debate the following question: "Should our city or region set a higher minimum wage for a specific sector, like fast-food or retail?"
Use your arguments from the previous activity and the evidence from the study to support your position. Listen carefully to the other groups and be ready to respond to their claims. The goal is not to "win," but to practice expressing your ideas clearly and persuasively.
Wrap-up: Final Thought
Think about everything we have discussed today—the initial news reports, the later academic data, and the different perspectives in the debate. On a piece of paper or a sticky note, write one single sentence that summarizes your main takeaway. It could be your own opinion, a question you still have, or the most surprising thing you learned.