Study finds major job losses linked to California’s $20 fast food minimum wage
California – Following California Governor Gavin Newsom’s legislation raising the minimum pay for fast food workers to $20, new Bureau of Labor Statistics (BLS) data shows a notable drop in employment in the industry. About 16,000 jobs have been lost since AB 1228 was adopted in April 2024, raising serious questions on how wage regulations affect employment stability.
Enacted to raise earnings from the former state minimum of $16 to $20, the Act sought to raise living conditions for low-paying food industry employees. Nonetheless, the most recent BLS numbers show a significant decline in employment; about 14,000 of these job losses happened in the six months following the law activation.
Having to deal with a 25% rise in labor expenses, companies have responded by lowering worker counts, decreasing work hours, and raising menu pricing. The Employment Policies Institute’s research of the BLS data shows that this change appears to have had a significant impact on the sector. Fast food employment across the state have consistently dropped monthly in the immediate aftermath.
“The propaganda coming out of Newsom’s office and the SEIU is completely out of touch with reality,” said Rebekah Paxton, EPI’s research director. “The data definitively shows thousands of jobs have been lost due to this harmful policy, and hardworking Californians are left feeling the burden.”
A Berkeley Research Group poll also revealed a notable surge in menu pricing, which have climbed by 14.5% since the pay raise—almost exactly twice the national average. While many fast food restaurants have reported cutting worker counts and working hours to help with rising costs, 98% of them have increased their prices.
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With 93% of polled restaurant operators intending additional price rises and major percentages expected to cut more jobs and lower hours further, the outlook for 2025 remains bleak. These changes have spurred a more general discussion on the effectiveness and unforeseen effects of large pay raises.
Opponents of AB 1228 argue that although having good intentions, the bill has had negative consequences on the same employees it sought to assist. The rule affects chains with more than 60 stores around the country, and its repercussions have been seen in operational changes including closures and moves toward automation, such the implementation of ordering kiosks and AI-driven service options, which replace traditional entry-level employment.
Newsom’s office has reaffirmed past assertions of sectoral job growth in reaction to these changes, however the most recent statistics shows a startling discrepancy: fast food employment in California dropped 2.8% from September 2023 to September 2024. For the state’s sector, the decline represents a severe slump and is far steeper than the national average.
As prices continue to climb—illustrated by $15 Big Mac meals—and job opportunities for young and low-skill workers diminish, the consequences of AB 1228 loom large over California’s economic landscape. With the Fast Food Council considering a further wage increase to $20.70 for 2025, the state stands at a critical juncture.
The need for a reassessment of wage policies to prevent further economic strain is evident, with Paxton emphasizing that “The data definitively shows thousands of jobs have been lost due to this harmful policy, and hardworking Californians are left feeling the burden. The Fast-Food Council should immediately halt discussions on increasing the fast-food minimum wage further.”
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As the debate over the future of California’s fast food wage law continues, the effects of AB 1228 serve as a poignant reminder of the delicate balance between wage policies and employment health in the state’s dynamic economy.
