California’s $20 Minimum Wage Leads to Fast-Food Job Losses

News Summary

A study by the National Bureau of Economic Research reveals that California’s implementation of a $20 minimum wage for fast-food workers has resulted in the loss of 18,000 jobs since April 1, 2024. This amounts to a 3.2% decline in fast-food employment compared to similar sectors nationwide. Critics are concerned about the negative impact on job opportunities, while supporters, including Governor Gavin Newsom, argue it is a step towards fairer wages. Contrasting studies indicate wage increases without significant job loss, indicating a complex economic landscape.

California – A recent study by the National Bureau of Economic Research (NBER) has unveiled that the implementation of a $20 minimum wage for fast-food workers in California has led to a significant loss of 18,000 jobs in the fast-food sector since it took effect on April 1, 2024. This job loss corresponds to a 3.2% decline in the state’s fast-food employment relative to similar sectors across the United States.

The research conducted by economists Jeffrey Clemens, Olivia Edwards, and Jonathan Meer estimates that if the minimum wage had not increased, these jobs would remain intact, highlighting a stark employment contraction in California. In contrast, fast-food employment in other states has reportedly increased by approximately 0.10% during the same period.

Following the passage of AB 1228 by the California Assembly in September 2023, the Fast Food Council was established, granting it the authority to set and adjust the state’s minimum wages for fast-food workers. The new wage mark represented a substantial jump from the previous rate of $16 per hour.

Post-implementation data indicates that California’s fast-food sector faced employment declines ranging from 2.3% to 3.9%, suggesting a notable contraction compared to national trends, where broader employment remained consistent. Prior to the law’s enactment, California’s fast-food sector growth was on par with the rest of the country, which makes the occupational downturn noteworthy.

Impacts and Reactions

Critics of the minimum wage increase have expressed concerns that the wage hike could adversely affect employment opportunities. They cite historical instances where wage controls have not produced the economic results proponents anticipated. On the contrary, California Governor Gavin Newsom endorsed the minimum wage law, viewing it as a significant stride towards fairer wages for fast-food workers and enhancing their bargaining power.

In response to the NBER study, Newsom’s deputy communications director contested the findings, pointing out the research’s association with a think tank believed to have a history of publishing misleading analyses. Additionally, a separate study conducted by a professor at UC Berkeley found that workers covered by the new wage law experienced an 8-9% increase in wages with no detrimental effects on the employment of non-covered workers. Such opposing research counters some claims made in the NBER report.

Furthermore, the data shows menu prices across fast-food establishments rose by an average of only 1.5% following the wage increase, indicating limited price impacts on consumers. It’s also important to note that the AB 1228 law does not apply to small fast-food chains with fewer than 60 locations, potentially minimizing the change’s effect on overall employment in the market.

Trends and Observations

In the aftermath of the wage increase, reports indicate a decline in median weekly hours for fast-food workers, leading to noticeable annual income reductions for many employees. Although overall trends within the broader California economy reflect patterns seen nationally, the specific changes within the fast-food sector have raised alarms regarding job security and economic viability in the industry.

As the discussion continues around the effects of California’s $20 minimum wage on employment, it remains clear that the policy has produced a complex landscape marked by job losses and contrasting viewpoints among economic scholars, policymakers, and industry advocates. As this situation unfolds, further research may be necessary to evaluate the long-term implications for workers, businesses, and the economy as a whole.

Deeper Dive: News & Info About This Topic

• Fox Business: Study Shows California’s $20 Minimum Wage Hike Cost State 18,000 Jobs
• USA Today: Minimum Wage Increase July 1, 2025
• Wall Street Journal: California Minimum Wage and Job Losses
• California Employment Law Report: Preparing for Minimum Wage Increases
• Newsweek: California Cities Minimum Wage Change July 1