California’s Fast Food Minimum Wage Continues to Bite Workers, Consumers and Owners

California is reaching a grim two-year anniversary of the ill-advised $20 fast food minimum wage. AB 1228, California’s $20 wage law for fast food workers, cost non-tipped restaurant workers 250 hours of work annually, equating to up to 7 weeks of lost work – up to $4,000 in lost potential income, the Globe has reported since the bill was passed in 2023.

Thousands of fast food employees lost jobs, employees’ hours were cut, and business owners had to do more with less.

Now, a new paper from economists at UC Santa Cruz confirms what the Employment Policies Institute (EPI) has been warning from the start–these drastic wage hikes will hurt workers by costing jobs, increasing inflation, and increasing automation of employee tasks.

The new findings serve as a warning to lawmakers and advocates across the country pushing for $25 and $30 an hour minimum wage laws, which will only result in even more economic decline.

Additional background information on the impacts of California’s $20 wage law and additional national wage hike proposals is available below.

UC Santa Cruz Economics Lecturer Stephen Owen set out to conduct an independent investigation, with help from a team of undergraduate researchers.

“Owen’s team reviewed data on monthly job applicant totals for 2023, 2024, and early 2025 from a Burger King franchise group that operates more than 50 locations in California and saw clear evidence of a dramatic increase in applications. August 2024 had one of the largest spikes, with a 400% increase compared to the same month in 2023. Applications remained greatly elevated throughout early 2025.”

Shockingly (not), the team found that greater labor costs to businesses are creating less demand for workers.

The researchers studied the records for Burger King locations of at least one franchise owner in coastal markets, which reported a more than 21% decline in shift work for employees from October 2023 to October 2024.

Across 18 McDonald’s franchise locations in the Central Valley, total labor hours declined by nearly 12% across equal 12-month periods from April 2023 to March 2025, equivalent to a loss of 62 full time jobs for a year.

Owen says this is an expected impact, based on economic theory.

As the Globe and economists predicted, while most fast food workers now earn substantially more per hour, many now work fewer hours, limiting improvements to their overall earnings.

“This is the cherry on top of years of evidence that Newsom’s fast food wage backfired on California and its workers, Employment Policies Institute research director, Rebekah Paxton said. “Fast food workers are now competing for fewer jobs and fewer shifts, and residents are paying higher prices for what used to be an economical meal option. Amid a historic affordability crisis nationwide, lawmakers across the country should beware of similar policies that leave workers and residents worse off.”

The Employment Policies Institute released data in May 2025 showing AB 1228, California’s $20 wage law for fast food workers, cost non-tipped restaurant workers 250 hours of work annually, equating to up to 7 weeks of lost work – up to $4,000 in lost potential income, the Globe reported.

As the Globe warned, thousands of fast food employees lost jobs, employees’ hours were cut, and business owners had to do more with less.

The bottom line according to UC Santa Cruz Economics lecturer Owen and his students is that costs are rising for both businesses and consumers.

“The working poor struggle to get by in California, and that’s a fact,” Economics lecturer Owen said. “So if we’re serious about helping the working poor, then I think it makes a lot more sense and would ultimately be more effective for the government to focus on other types of policies, such as deregulation to promote business growth and targeted income assistance to families working at or below the poverty line. Freeing businesses from unnecessary regulations would be a much better way for California to empower business growth, leading to increased hiring and higher wages as businesses are allowed to prosper.”

Some details about the fast food minimum wage from EPI:

• Since the law was signed in September 2023, BLS quarterly data shows California’s fast food industry lost 19,102 jobs (-3.3% loss), including 15,988 fast food jobs lost since the law went into effect in April 2024.
• California’s fast food job loss rate (-3.3% of jobs lost) more than doubled the losses in fast food restaurants nationally (-1.6% of jobs lost) since September 2023.
• California’s fast food restaurants accounted for a quarter (25.3%) of all fast food industry job losses in the nation over this period.
• California’s fast food industry job loss also outpaced total private industry job losses in the state (-1.3% of jobs lost), and represents nearly 10% of all statewide job losses just in fast food over this period.
• After the implementation of the $20 minimum wage law, an EPI survey found that a majority of restaurants say they had raised menu prices (98%), reduced employee hours (89%), limited employee shift pick-up or overtime opportunities (73%) and reduced staff or consolidated positions (70%) as a result of the minimum wage law.
• Additionally, a majority of restaurants surveyed said in the next year they will have to raise menu prices (93%), reduce employee hours (87%), reduce staff or consolidate positions (74%), and limit employee shift pick-up or overtime opportunities (71%).
• An EPI analysis of U.S. minimum wage studies shows a $1 increase in the minimum wage could trigger price increases of up to 5.5%.
• Studies estimate that a $1 increase in the federal minimum wage could increase the likelihood of robot adoption by up to 11%.
• Other states are heeding California’s lessons. Rhode Island recently decided to hold on a proposed $20 an hour wage hike, Chicago’s City Council voted to halt a wage hike for restaurant workers. In 2024, Massachusetts voters rejected an $18 an hour minimum wage, and workers and business owners are warning against Mandami’s $30 an hour wage in New York.

Another example of California’s minimum wage madness, Alameda County is proposing to raise the minimum wage to $30 an hour, following similar proposals in Los Angeles.

Given how the $20 fast food wage has played out so disastrously, and how the Los Angeles hotel industry is already reporting a 6% job cut due to the wage hike, Alameda County needs to rethink this potential economic disaster.

NBC Bay Area has the story: