The controversial minimum wage of $ 20 from California for fast food workers has led to significant job losses based on newly revised employment data, contradicting previous studies that have claimed a minimum impact of wage increase.
An analysis of March 2025 of economist Christopher Thornberg reveals that the fast food industry of California has lost more than 23,100 jobs in the past year after the implementation of the rapid state act, which increased the minimum wage for chain restaurants to $ 20 an hour in April 2024.
“These results undermine a large part of the recent analysis published by pro-development groups which claimed that the rapid act had little impact on the restoration industry with limited service in California,” wrote Thornberg in its report.
The California Employment Development Department recently published its January 2025 employment report with revised estimates for the previous 18 months. These revisions have reduced the overall number of employment of the State by 92,100 positions (approximately 0.5%) for December 2024, restaurants at the limited service constantly limited a disproportionate reduction of 21,500 jobs, representing a reduction of 2.5% in the sector.
Although initial estimates have suggested little change in fast food employment throughout 2024, revised data show that the sector has actually lost 3.2% of its workforce in the last 12 months. This contrasts sharply with the national trend, where the use of fast food increased by 0.8% over the same period.
Global employment in California increased by 0.2% during this period, against 1.2% of growth nationwide.
Thornberg, who works with Beacon Economics, maintains that the negative effects of employment were predictable but took the time to appear in official statistics. The revised figures incorporate data from the quarterly census of the United States and salaries of the Labor Statistics Office, which is based on real pay files to the employer rather than the surveys and estimates used for monthly employment reports.
“The fact that we had to wait for the revisions to really see the losses of fast food jobs is part of the proofs of what is happening,” writes Thornberg.
He argues that previous analyzes declaring the rapid act a success has been premature because “the impact of this type of change of policy is not clear in data for several months, since it takes time to industry to adapt to the sharp increase in labor costs and also because the large part of the most relevant data is shifted in terms of collection and release.”
Thornberg notes that these figures can really underestimate the real impact, because approximately half of the limited service restaurants included in the overall figures in the sector are not part of the channels and are therefore not subject to the minimum wage requirement of $ 20.
Fast ACT (AB 1228) increased the minimum wage for fast food restaurants franchised at $ 20 per hour from April 1, 2024 – $ 4 more than the standard minimum wage in California. The law applies specifically to the restaurant chain with 60 or more nationwide locations, creating what Thornberg describes as a “natural experience” to study the effects of the minimum wage.
The legislation emerged from a disputed battle between unions and the fast food industry. In 2022, the Legislative Assembly initially adopted a bill supported by a union which would have increased the minimum wage to $ 22 and declared fast food franchises as a subsidiaries of parents of parents rather than independent companies.
The industry responded with a referendum to cancel the law, but a potential voting fight was avoided in 2023 with compromise legislation which forced a minimum wage of $ 20 and put aside the problem of franchise status while creating the fast food coucil to oversee the conditions of remuneration and work.
The debate on the impacts of the minimum wage has divided economists for decades. Although Thornberg notes that “the median vision of economists is that there is a clear, although proportional negative impact, of salary soils”, he recognizes that “a vocal segment in the field of economy claims that the impacts are largely insignificant”.
Before these employment revisions, several research groups had published analyzes suggesting minimum negative effects of Fast Act.
Harvard researchers at Kennedy and UC San Francisco published a study in October 2024 which revealed that “fast food workers in California experienced substantial salary increases” with “no evidence that salary increases had unforeseen consequences on staff, planning or wage theft”.
This study, on the basis of survey data of more than 3,400 fast food workers, concluded that “time wages for California fast food workers increased by at least $ 2.50” after the law entered into force, the share of workers earning less than $ 20 an hour down approximately 60 percentage points.
The researchers found “no evidence that the employers were turning to the lack of staff or reduced the hours of work planned to compensate for the increase in labor costs” and reported that “weekly working hours have been about the same for fast food workers in California”.
Likewise, the UC Berkeley research and work institute concluded that the policy “increased the average hourly wage by 18% remarkable, and yet it did not reduce employment”, while increasing prices “by around 3.7%, or about 15 cents on a $ 4” hamburger.
Governor Gavin Newsom cited these results, declaring in October that “data shows that investment in workers benefits everyone – workers, businesses and our state as a whole”.
However, Thornberg argues that these conclusions were made “far too early” and calls the fast food coucil to “suspend any other change until more in-depth and impartial research is carried out” because the industry faces potential additional impacts beyond job losses.
