California’s Fast-Food Minimum Wage Hike Leads to Job Loss

News Summary

A recent study from the National Bureau of Economic Research reveals that California’s minimum wage increase for fast-food workers to $20 per hour has resulted in a significant job loss of around 18,000 positions since its implementation in April 2024. The legislation, aimed at setting fair wages, has sparked debate among policymakers and economists as job losses in the state contrast sharply with national employment trends in the fast-food sector, which have seen a modest increase. The report raises concerns about broader economic implications in the state.

California’s recent increase of the minimum wage for fast-food workers to $20 per hour has resulted in a significant job loss in the sector, according to a new study from the National Bureau of Economic Research (NBER). Since the wage hike was implemented in April 2024, approximately 18,000 jobs have been lost, indicating a 3.2% decline in employment relative to fast-food sectors in other states.

The research, conducted by economists Jeffrey Clemens, Olivia Edwards, and Jonathan Meer, attributes the job loss directly to the wage increase mandated by California Assembly Bill 1228, which was enacted in September 2023. This legislation established a Fast Food Council to set and adjust wages for fast-food workers, bringing the hourly wage up from a previous rate of $16. The new minimum wage took effect on April 1, 2024.

According to the study, the contraction in California’s fast-food employment stands in stark contrast to national trends, where fast-food employment in other U.S. states increased by approximately 0.10% during the same period. Employment in California’s fast-food sector fell between 2.3% and 3.9% following the enactment of AB 1228, a notable downturn given that prior to the law, California’s fast-food job growth was on par with the national trend.

The findings have sparked debate among economists and policymakers. Critics of the wage increase contend that such measures typically lead to adverse effects on employment opportunities. They cite historical instances where wage controls have failed to produce the desired economic outcomes. In contrast, proponents, including California Governor Gavin Newsom, argue that the law marks progress toward fairer wages and enhances the voice of fast-food workers.

Disputing the NBER study’s findings, a representative from Newsom’s office mentioned that the research is linked to a think tank accused of disseminating misleading information on wage impacts. Additional research from a professor at the University of California, Berkeley, proposes that covered workers experienced wage increases of 8-9% without any adverse effects on employment for non-covered workers, countering claims made in the NBER study.

In the wake of the wage hike, California also saw menu prices in fast-food establishments rise by an average of 1.5%, raising questions about the broader economic implications of the new wage law. However, implementation of AB 1228 did not apply to smaller fast-food chains with fewer than 60 locations, which may have limited its impact on the overall employment landscape.

Moreover, the study identified trends beyond just job loss. Following the wage increase, median weekly hours for fast-food workers reportedly decreased, resulting in notable annual income losses for many employees. While the broader California economy exhibited employment trends consistent with national patterns, the transformation within the fast-food sector raises concerns and signals a potential divergence from broader economic health.

As this discussion continues, the implications of California’s minimum wage increase on the fast-food industry will be scrutinized closely, both by policymakers and economists, as they seek to understand the true impact on employment and economic stability within the state.

Deeper Dive: News & Info About This Topic

• Fox Business: California’s Minimum Wage Hike Cost 18,000 Jobs
• USA Today: Minimum Wage Increase July 1, 2025
• Reason: California’s Minimum Wage Hike Cost 18,000 Fast Food Jobs
• California Employment Law Report: How Employers Can Prepare for Minimum Wage Increases
• Wikipedia: Minimum Wage