California bill could increase fast food prices by 20%: Here’s what you need to know

California State Senate passes fast food workers rights bill

The State Senate has passed the fast food workers rights bill, much to the relief of employees FOX 11's Hal Eisner spoke with.

The California State Senate on Monday passed Assembly Bill 257, aimed at regulating the fast food industry. Supporters of the law claim that it is necessary to boost limited-service restaurant worker wages but an analysis commissioned by the UC Riverside Center for Economic Forecast and Development says it would drive up the price of fast food by as much as 20%.

"Increases in costs, such as in worker compensation, inevitably translate into higher food prices, fewer of these restaurants, and less employment in the industry," the analysis states.

Restaurant owners and franchisers commissioned the analysis, which further found that setting minimum wages between $22 and $43 would generate an increase of 60% in labor costs, ultimately hiking the price for the consumer.

"The amount by which food prices could increase will vary depending on how much worker compensation increases. If limited-service restaurant worker compensation increases by 20%, limited-service restaurant prices would increase by approximately 7%. If limited-service restaurant worker compensation increases by 60%, limited-service restaurant prices would increase between 20% and 22%," the report states.

California’s measure would cover fast food restaurants with at least 100 establishments nationally.

It grew out of the decade-long Fight for $15 and a Union minimum wage movement and efforts by labor unions to organize fast food workers in California and nationwide.

Fast food workers in California are paid nearly $3 an hour less than comparable workers in other service sector jobs, according to a joint study released this month by Harvard and UC San Francisco.

Gov. Gavin Newsom has not publicly stated his opinion on the bill, however, back in June, his Department of Finance released an analysis in opposition, saying it would create "significant ongoing costs" and a "fragmented regulatory and legal environment" for employers. Newsom has until Sept. 30 to sign or veto the bill.

The Associated Press contributed to this report.