• by Tanya Gazdik , December 27, 2023

Pizza Hut is laying off more than 1,200 delivery drivers in anticipation of the minimum wage increase in California. 

In less than a week, the minimum wage in California will go up by 50 cents to $16 an hour.  Then on April 1, fast-food restaurants with 60 locations or more by law will have to pay $20 an hour.

The law affects 557,000 fast-food workers at 30,000 restaurants in California, according to  USA Today.

"PacPizza, LLC, operating as Pizza Hut, has made a business decision to eliminate first-party delivery services and, as a result, the elimination of all delivery driver positions," per a federal Worker Adjustment and Retraining Notification Act notice filed by the fast-food operator with the state's Employment Development Department.

The WARN Act requires employers to give notice of plant closures or mass layoffs.

Other fast-food chains like Chipotle and McDonald’s plan to raise prices to offset the state's higher labor costs, according to the Daily Mail. 

Mark Kalinowski, a restaurant-industry analyst, wrote in a note this week that he expected "more harm to come" in various ways as fast-food chains "take action in an attempt to blunt the impact of higher labor costs,” according to Business Insider.

Economics professors say the layoffs could also impact customers in many ways.

"You might have longer lines, you might have dirtier, dirty restaurants,” David Neumark, a UIC Economics Professor, tells ABC 30 Action News. “There is even a study from Seattle that when they raised the minimum wage, hygiene violations increased, but consumer prices are also one potential route.”

Some estimates suggest up to 50,000 jobs could be lost in the state of California.

The FAST Act, signed into California law by Gov. Gavin Newson in 2022, originally called for minimum wage for fast food workers to increase to $22 next year. 

But corporate chains and franchise-advocacy groups fought the law.

“A coalition of restaurant-industry organizations said the law could raise costs for fast-food restaurants by $3 billion,” per Business Insider. “They rallied to get a referendum on the ballot.”

A new law, AB 1228, replaced the FAST Act and changed the minimum wage hike to $20 an hour. 

“The new law was viewed as a compromise between the labor unions representing fast-food workers and the restaurant industry,” per Business Insider.