A newly published economic analysis has found that California’s 2023 fast-food minimum wage hike has led to the elimination of thousands of jobs across the sector.
A newly published economic analysis has found that California’s 2023 fast-food minimum wage hike has led to the elimination of thousands of jobs across the sector.
According to a working paper released this month by the National Bureau of Economic Research (NBER), employment in California’s fast-food industry dropped by 18,000 jobs after the new $20 minimum wage took effect in April 2024—a 3.2 percent decline compared to other states, according to Fox News.
"Following AB 1228’s enactment, employment in the fast food sector in California fell substantially, with estimates ranging from 2.3 to 3.9 percent across specifications, even as employment in other sectors of the California economy tracked national trends," researchers Jeffrey Clemens, Olivia Edwards, and Jonathan Meer wrote. They added that fast-food jobs in the rest of the US increased slightly over the same period, by about "0.10 percent."
California approved AB 1228 in September 2023. The legislation created a new “Fast Food Council” with the authority to set wages for the sector. Governor Gavin Newsom signed the bill into law the following April. The text of the law reads: "The hourly minimum wage for fast food restaurant employees shall be twenty dollars ($20) per hour, effective April 1, 2024. Thereafter, the council may establish, pursuant to this subdivision, minimum wages for fast food restaurant employees that take effect on an annual basis, beginning on January 1, 2025."
The report notes that prior to the new law, employment trends in California’s fast-food sector largely mirrored those across the country. After implementation, however, the state saw a sharp divergence.
Critics of the wage increase were quick to highlight the study’s findings.
"When it comes to central planning, history keeps the receipts: Wage controls never work. That’s because policymakers can set wage laws, but they can’t outlaw the consequences," Rachel Greszler, an economic analyst at The Heritage Foundation, wrote in The Daily Signal.
She added, "The consequences of that wage hike on the fast-food industry should be a warning sign" for cities like Los Angeles, which voted to raise the minimum wage for hotel and airport workers to $30 by 2028.
The Wall Street Journal editorial board also responded critically, writing, "The Democratic Party’s socialist nominee for New York mayor, Zohran Mamdani, has called for increasing the city’s minimum wage to $30. Andrew Cuomo, his supposedly more moderate competitor, wants a $20 minimum. These guys will never learn because they don’t want to see the world as it really is."
However, supporters of the wage increase pushed back. Newsom spokesperson Tara Gallegos questioned the paper’s reliability, citing the researchers’ affiliation with the Hoover Institution—a think tank she said has previously published “false or misleading information” about California wage policies.
Gallegos also pointed to an October 2024 article from the San Francisco Chronicle that claimed the wage increase had defied early predictions of economic harm.
In addition, Gallegos referenced a February study conducted by a UC Berkeley professor, which reported that workers affected by the wage increase saw an 8–9 percent boost in pay.
The study concluded that there were “no negative effects on fast-food employment” or spillover effects on other sectors. It also found that the number of fast-food restaurants in California increased more rapidly than in the rest of the country during the same time period.
The Berkeley study covered employment trends from April through mid-December 2024.
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