Brace yourself, California—your fast-food burger just got pricier, and not just at the counter. According to Fox Business, A recent study from the National Bureau of Economic Research (NBER) dropped a bombshell this month, revealing that the state’s shiny new $20 per hour minimum wage for fast-food workers, rolled out on April 1, 2024, has carved out a staggering 18,000 jobs from the sector. That’s a bitter pill for workers who thought a pay bump would be all upside.
Here’s the crux: California’s push to hike the fast-food minimum wage, enacted through AB 1228, has led to a 3.2% employment drop in the sector compared to other states, while also sparking fierce debate over whether such policies help or hurt the very people they aim to protect.
Let’s rewind to the beginning. Back in April 2023, Governor Gavin Newsom signed AB 1228 into law, a bill passed by the California Assembly in September 2023, which jacked up the fast-food minimum wage from $16 to $20 per hour. It also birthed the Fast Food Council, a body tasked with setting future wage adjustments starting January 1, 2025.
Before this law took effect on April 1, 2024, California’s fast-food employment trends mirrored the rest of the nation. That symmetry vanished post-haste, with the NBER study showing a contraction of 2.3% to 3.9% in the state’s fast-food jobs, while national employment in the sector ticked up by a modest 0.1%.
The study’s authors didn’t mince words, estimating a gut-punch loss of 18,000 jobs. “Our median estimate translates into a loss of 18,000 jobs in California's fast-food sector,” wrote Jeffrey Clemens, Olivia Edwards, and Jonathan Meer. That’s not just a number—it’s livelihoods swept away by a policy pen stroke.
Critics of the wage hike, like Rachel Greszler from The Heritage Foundation, see this as a cautionary tale. “When it comes to central planning, history keeps the receipts: Wage controls never work,” Greszler argued. Her point stings—good intentions don’t dodge bad outcomes, and Los Angeles might want to take note before chasing similar policies.
Not everyone agrees on the fallout, though. Newsom’s deputy director of communications, Tara Gallegos, pushed back, calling some claims “false or misleading information” and citing a UC Berkeley study that paints a rosier picture. But when jobs vanish, it’s hard to sell sunshine and rainbows to the unemployed.
Gallegos leaned on the Berkeley findings, noting, “Workers covered by the policy saw wage increases of 8 to 9%.” She also highlighted “no negative effects on fast-food employment” in their data. That’s a bold claim when NBER’s numbers scream the opposite—18,000 missing paychecks don’t lie.
Even more curious, Gallegos pointed out that “the number of fast-food establishments grew faster in California” than elsewhere, per the Berkeley study. Growth in storefronts sounds great, but if fewer people are staffing them, what’s the real win for workers?
The Berkeley study also downplayed consumer impact, with Gallegos stating menu prices rose by just “an average of 1.5%.” That’s a mere six cents on a $4 burger, they say, but tell that to families already stretched thin—every penny counts when inflation’s still biting.
The Wall Street Journal editorial board scoffed at the broader mindset behind such hikes, labeling it “magical thinking.” When policymakers believe wage mandates can defy economic gravity, the crash landing—like California’s job losses—shouldn’t shock anyone paying attention.
Supporters of AB 1228, via Gallegos, insist the policy “defies a lot of the doom-and-gloom predictions” made when Newsom signed the bill. Yet, with thousands sidelined, that defiance feels more like denial—ignoring hard data won’t bring those jobs back.
Let’s not forget the Fast Food Council’s looming role—starting next year, they can tweak wages annually. If this first $20 experiment cost 18,000 jobs, what’s the encore going to look like for California’s fast-food workforce?
At the end of the day, this saga is a stark reminder that economic policies aren’t just numbers on a page—they’re people’s lives. California aimed to lift workers with a hefty wage boost, but instead, many got a pink slip. It’s a tough lesson in unintended consequences, one that other states might do well to study before following suit.
