California’s Minimum Wage Hike Results in Job Losses in Fast-Food Sector

News Summary

A study by the National Bureau of Economic Research reveals that California’s minimum wage increase to $20 for fast-food workers has resulted in 18,000 job losses in the sector since April 2024. The research shows a 3.2% decline in fast-food employment in California compared to small increases in other states. The wage hike, enacted through Assembly Bill 1228, has sparked debate with proponents arguing for fairer wages, while critics claim it’s hurt job availability. Additionally, small menu price increases indicate that the industry may be adjusting to these new wage costs.

California’s Minimum Wage Hike Results in Job Losses in Fast-Food Sector

A recent study published by the National Bureau of Economic Research (NBER) has unveiled that California’s $20 minimum wage for fast-food workers has led to a notable loss of 18,000 jobs in that sector since its implementation in April 2024. This significant decrease represents a 3.2% decline in California’s fast-food employment compared to other regions in the United States.

The research, conducted by economists Jeffrey Clemens, Olivia Edwards, and Jonathan Meer, highlights that without the minimum wage increase, these jobs would likely still be available. The findings indicate that while California’s fast-food employment has contracted, other states in the U.S. have experienced a modest increase of approximately 0.10% in fast-food employment.

Impact of Legislative Changes

The California Assembly passed Assembly Bill 1228 (AB 1228) in September 2023, which established the state’s Fast Food Council. This council was granted the authority to set and adjust the minimum wage for fast-food workers. The wage hike to $20 an hour was a stark jump from the prior rate of $16 per hour and took effect on April 1, 2024.

According to the study, the effects of this wage increase were immediately observable in California, with employment in the fast-food sector declining by between 2.3% and 3.9% following AB 1228’s enactment. Before the law was put into place, California’s fast-food sector was growing at a pace similar to the rest of the nation, underscoring the potential impact of the wage policy.

Counterarguments and Responses

Criticism of the minimum wage hike has emerged, with some arguing that historical instances have shown that wage controls can have detrimental effects on employment opportunities. Proponents of the wage increase, including California Governor Gavin Newsom, have defended the law, presenting it as a vital step towards establishing fairer wages and empowering fast-food workers.

However, the findings from the NBER study have been disputed by state officials, including the deputy communications director for Newsom, who pointed out that the research was affiliated with a think-tank known for producing controversial economic analyses. An alternative study from a professor at UC Berkeley suggested that workers covered by the minimum wage increase experienced wage growth of 8-9% without adverse effects on employment for non-covered workers.

The response to the wage hike has also evidenced itself in small increases in menu prices, which averaged just 1.5% following the increase, suggesting that the fast-food industry may be absorbing some of the wage costs rather than passing them entirely onto consumers.

Sector-Specific Trends

It is also essential to note that the implementation of AB 1228 did not extend to small fast-food chains with fewer than 60 locations, potentially limiting the overall impact on employment across the broader fast-food market. Despite the job losses, overall employment trends in California’s diverse economy have remained in line with national patterns, except for the marked changes observed within the fast-food sector.

Following the implementation of the new wage, the median weekly hours reported by fast-food workers in California have decreased, leading to substantial annual income losses for some employees. The combination of rising minimum wages and reduced hours creates a complex economic landscape that raises questions about the long-term viability and health of the fast-food industry within the state.

California’s recent introduction of a $20 minimum wage for fast-food workers has triggered a significant shift in employment dynamics within the state’s fast-food sector, highlighting the broad implications of wage policy on job retention and economic performance.

Deeper Dive: News & Info About This Topic

• Fox Business: Study Shows California’s $20 Minimum Wage Hike Cost State 18,000 Jobs
• Wikipedia: Minimum Wage
• Wall Street Journal: California Minimum Wage and Job Losses
• Google Search: California minimum wage increase
• Reason: California’s Minimum Wage Hike Cost 18,000 Fast-Food Jobs
• Encyclopedia Britannica: Minimum Wage
• USA Today: Minimum Wage Increase July 1, 2025
• Google News: California fast-food job losses