that California’s decision to raise the minimum wage for fast-food workers to $20 per hour has resulted in significant job reductions in the sector. The study estimates a loss of approximately 18,000 positions in California’s fast-food industry since the policy took effect in April 2024, marking a 3.2% drop compared to similar sectors elsewhere in the U.S.
The researchers, Jeffrey Clemens, Olivia Edwards, and Jonathan Meer, concluded in their report: “Our median estimate translates into a loss of 18,000 jobs in California’s fast-food sector relative to the counterfactual.” This paper, released this month, is accessible via the NBER website.
The policy stems from Assembly Bill 1228, which California lawmakers approved in September 2023. Signed by Governor Gavin Newsom, it created a Fast Food Council empowered to set and adjust wages for the industry. Effective April 1, 2024, the bill increased the hourly minimum from $16 to $20 for fast-food employees, with provisions for annual adjustments starting in 2025.
According to the study, fast-food employment in California declined notably after the bill’s passage, with reductions estimated between 2.3% and 3.9% across various models. In contrast, the national fast-food sector saw a slight growth of about 0.10% during the same period, while other parts of California’s economy aligned with broader U.S. trends. The researchers noted that prior to the law’s implementation, California’s fast-food job market had been on a comparable trajectory to the rest of the country.
The findings have drawn criticism toward the wage increase. Rachel Greszler, an economic expert at The Heritage Foundation, argued in a Daily Signal op-ed that “wage controls never work” because policymakers cannot avoid the inevitable repercussions. She highlighted the fast-food sector’s outcomes as a cautionary tale, particularly for Los Angeles, which recently approved a phased minimum wage rise to $30 by 2028 for hotel and airport workers.
The Wall Street Journal’s editorial board dismissed the idea that large wage hikes boost the economy as “magical thinking.” They also critiqued New York City mayoral hopefuls Andrew Cuomo and Zohran Mamdani for advocating similar increases—$20 and $30, respectively—suggesting such proposals ignore real-world evidence.