California’s ambitious $20 minimum wage for fast food workers has already led to steep job losses, according to a new economic study. While supporters claim the hike helped workers, data suggests it’s pushed many out of work entirely.
Key Facts:
- California raised its minimum wage for fast food workers to $20/hour on April 1, 2024.
- A study from the National Bureau of Economic Research found the state lost 18,000 fast food jobs—down 3.2% compared to other states.
- Employment in the same sector rose by about 0.1% nationwide during the same period.
- The law, AB 1228, gave a state-appointed council power to set fast food wages going forward.
- Gov. Gavin Newsom’s office disputed the findings, citing a UC Berkeley study with different conclusions.
The Rest of The Story:
The National Bureau of Economic Research (NBER) published a new study showing California’s minimum wage hike in the fast food sector has had real economic consequences.
Since April 2024, when the $20/hour law took effect, the state’s fast food industry has shed an estimated 18,000 jobs.
Before the hike, California’s fast food employment had been in line with the rest of the country. But post-implementation, researchers say the state’s employment diverged, dropping as much as 3.9% while national fast food employment slightly increased.
The legislation—AB 1228—was passed in September 2023 and signed by Governor Gavin Newsom. It created a Fast Food Council empowered to raise wages for the sector annually.
The hourly wage jumped from $16 to $20 in April 2024, with more increases possible starting January 2025.
Critics say the job losses were inevitable. “Wage controls never work,” wrote Heritage Foundation economist Rachel Greszler.
She warned that Los Angeles and other cities planning $30/hour wage goals may face similar fallout. The Wall Street Journal echoed that sentiment, calling wage hikes “magical thinking.”
Newsom’s team pushed back. Deputy Director Tara Gallegos accused the study of bias, noting its link to the Hoover Institution.
She pointed to a February UC Berkeley study that found no negative employment effects and claimed fast food establishments actually grew faster in California.
Last year, California increased its minimum wage for fast food workers from $16 to $20 an hour. Politicians hailed this as a great idea that would help working-class Californians. But Reason’s @emmma_camp_ shares what happened to fast food jobs. pic.twitter.com/bYbbe8f34l
— reason (@reason) May 27, 2025
Commentary:
This outcome was entirely predictable.
When you artificially raise wages well above the market rate for entry-level, low-skill jobs, businesses react.
And they don’t hire more people—they automate, downsize, or shut locations entirely.
Fast food is especially vulnerable. It runs on tight margins and high volume. When the cost of labor spikes overnight, the business model breaks.
Employers don’t have to keep staff—they can install kiosks or use drive-thru AI ordering systems. These technologies already exist, and now they’re cheaper than keeping human workers.
Burger-flipping robots aren’t a science fiction gimmick anymore—they’re a real business solution. And the more expensive human labor becomes, the more attractive the machines get.
Once implemented, automation doesn’t ask for raises or take sick days. That’s just math.
Advocates for these wage hikes often ignore those consequences. They sell the public on the idea of fairness, but leave out the part where jobs vanish.
A higher paycheck is meaningless if there’s no job to earn it.
The claims from Newsom’s office and UC Berkeley researchers miss the forest for the trees. They focus on short-term or cherry-picked data, while the broader employment picture turns red.
Even a 1.5% menu price increase doesn’t offset the damage done to working-class employment. California’s push to regulate wages from the top down is only making life harder for those at the bottom.
Politicians may celebrate, but the real losers are the people who just lost their jobs.
The Bottom Line:
California’s $20 fast food wage law has already cost thousands of jobs, with new data confirming the fallout many warned about.
Businesses have responded by cutting positions and likely accelerating automation.
While state officials deny the damage, the numbers tell a clear story: good intentions don’t guarantee good results.
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