California's Minimum Wage Hike Cost 18,000 Fast-Food Jobs as Employment Ticked Up in Other States
The law transferred wealth from workers who lost their jobs to those who didn’t.
California Gov. Gavin Newsom signed Assembly Bill 1228 into law in September 2023, which established a Fast Food Council within California's Department of Industrial Relations and increased the minimum wage for 500,000 fast food workers from $16.00 per hour to $20 per hour on April 1, 2024. Newsom celebrated his signing of the bill as "one step closer to fairer wages…by giving hardworking fast-food workers a stronger voice and seat at the table." Former Assemblymember Chris Holden (D–Pasadena), the bill's primary sponsor, described it as "one of the most impactful fast food wage laws that this country has ever seen."
The law was certainly impactful: A working paper recently published by the National Bureau of Economic Research (NBER) found that the law increased wages in California's fast food sector by 8 percent relative to the rest of the country. But not all of the consequences of the law were intended or positive for workers.
The NBER paper also found that California's fast food employment decreased by 2.64 percent from September 2023 (when Newsom signed the bill into law) to September 2024, while fast food employment elsewhere in the U.S. increased by 0.10 percent over this same period. The paper's economists estimate that the law caused "a loss of 18,000 jobs that would have otherwise existed in the absence of the policy." This finding is particularly striking considering employment trends in California and the rest of the United States.
The authors note that "fast food employment in California had, in fact, grown slightly more than fast food employment in the rest of the United States prior to AB 1228's enactment." Taking this into account, the economists estimated that California's fast food industry employment contracted by 3.2 percent relative to fast food employment in the U.S. and by 3.5 percent when only compared to states that did not enact minimum wage increases (which bias the estimate downward). California's fast food employment shrank "even as employment in other sectors of the California economy tracked national trends," according to the paper.
The Employment Policies Institute (EPI), a nonprofit research organization focused on the economic effects of employment-related public policies, found a reduction in the average hours worked by fast food employees in California following the passage of the law. The median usual weekly hours worked was 40 from January 2022 to August 2023, prior to the signing of A.B. 1228. However, from April 2024, when the $20 fast food minimum wage went into effect, to May 2025, when the EPI released their findings, the median usual weekly hours decreased to 35, translating to $4,000 in lost potential annual income under the $16 minimum wage.
The median fast food worker making minimum wage before and after April 2024 still experienced an increase in gross earnings of 12.5 percent, even with a a 5-hour decrease in usual weekly hours. This increase in income enjoyed by fast food workers who retained their jobs following the enactment of A.B. 1228 is little comfort to the thousands of fast food workers who lost their jobs.
