A new study has found that California’s $20 minimum wage increase for fast food workers has led to a spike in job losses in the state.
According to research from the Berkeley Research Group, the state lost 10,700 fast-food jobs between June 2023 and June 2024. Additionally, menu prices at fast food establishments increased by 14.5 percent after the wage hike took effect last April.
“California fast food restaurants also increased automation and technology adoption to offset rising labor costs,” the study found. “Therefore, it should not be surprising that the number of employees per restaurant is declining.”
“Californians are bearing the cost of the minimum wage increase through fewer available jobs and higher food cost,” it added.
The report further warned that the wage hike could ultimately result in lower overall earnings for workers due to reduced job opportunities and increased automation.
“If large enough, the combination of job eliminations and reductions could leave workers earning less income as a result of (the) $20 minimum wage,” the report explained. “For example, even if no jobs are eliminated (a dubious assumption given the BLS data discussed above), a 20% reduction in hours worked with no overtime increases would erase the financial gains from the 25% hourly wage increase, leaving workers with the same or even less total income.”
California-based restaurant owner Andrew Gruel told Fox News he anticipated severe consequences for the service industry due to the wage increase.
“I railed about this months ago,” he said. He suggested that struggling businesses should “cut your menu size, outsource a lot of kitchen labor and utilize AI for back office management.”
The $20 minimum wage for fast food workers, which became law in April 2024, was an increase from the previous $16 minimum. At the time, California Governor Gavin Newsom defended the policy as necessary to help workers manage the state’s rising cost of living.
“Fast food workers in CA will now be paid the highest minimum wage of any state in the country. I just signed a bill that will ensure these workers receive the fair pay they deserve,” Newsom said when signing the legislation.
