Harvard Kennedy School determines there's no negative impacts to California workers after minimum wage hike—study does not measure small businesses

In a report from the Harvard Kennedy School on California’s minimum wage increase, authors Daniel Schneider, Kristen Harknett and Kevin Bruey argue that there have been no adverse effects on hours, scheduling, or benefits from legislation requiring $20 an hour wage for fast-food worker, but those workers are all from large fast-food chains. The study only looked at large fast-food companies and did not consider small businesses who would have much more difficulty in meeting the demands of the minimum wage law.

The report does not exhaustively list the fast-food outlets used as the basis of the report, only noting that "front line workers at some of the nation’s largest firms—from McDonald’s to Chipotle— contend with unstable schedules, limited benefits, and chronically low wages.”

The authors laud California as being “at the vanguard of progressive and innovative protections for fast food workers” and insists the state raising the minimum wage by $4 on Apr. 1, 2024 to $20 was one of these progressive and innovative protections” and constituted the largest such wage increase in US history.

The report found that “California fast food workers experienced substantial wage increases immediately after the new minimum wage went into effect” as the average hourly wage for fast food workers “increased by at least $2.50” while workers less than $20 fell by about 60 percent.

The report also found “no evidence that wage increases were accompanied by a reduction in fringe benefits” because California fast food outlets apparently did not reduce the cost of business by reducing or eliminating health or dental benefits. The report notes fast food workers are continuing to demand more work hours as about one-third are working part-time. The entire report is available online.

Although the report only tests hours, wages, and benefits, it found that around 12 percent of businesses were non-compliant with the change in the law. Other reporting may suggest franchises were preparing for the wage hikes much earlier than the report suggests.

According the Hoover Institution, 10,000 fast-food jobs were lost in the lead up to enacting the law. California Governor Gavin Newsom signed the legislation in September 2023, but it was not enacted until this past April. Between September 20243 and January 2024, fast-food chains in California cut 9,500 of the 10,000 that were lost prior to April 2024. 

Additionally, the wage hike spurred higher demand for kiosks at fast food restaurants, per Food on Demand, which could lead to higher efficiency for fast food joints looking to make up for the costs of higher wages. Sam Zietz, CEO of fast-food kiosk provider GRUBBRR told the outlet in June, Zietz said kiosks went from “nice to have to need to have real, real fast.”