Data Forecasts Drastic Job Losses from San Diego $25 Wage

Earlier this week, the San Diego City Council voted to raise the minimum wage for hospitality workers to $25 an hour. “What was initially intended as an immediate infusion of higher wages for all workers in San Diego’s tourism industry last week reappeared Tuesday with many carve-outs and a phased-in timeline,” CBS 8 reported.

Apparently the San Diego City Council learned nothing from the statewide fast food minimum wage signed into law by Governor Gavin Newsom, which resulted in the loss of nearly 20,000 fast food jobs, increased food prices, and led to restaurant closures. Additionally, the higher minimum wage increase did not result in higher income for workers because fast food owners reduced employee hours to offset the costs of the increased wage.

This is why you see heightened automation, ordering kiosks, AI drive-thru systems, and robotic kitchen automation.

According to the Employment Policies Institute (EPI), “New quarterly employment data released on September 9 show California’s fast food industry continued to lose jobs through the first quarter of 2025. Despite Governor Gavin Newsom’s recent victory lap claiming the Golden State is ‘protecting fast food workers,’ Bureau of Labor Statistics data shows the opposite.”

As the Globe reported, AB 1228 was signed into law in October 2023 by Governor Gavin Newsom, creating the new $20 minimum wage for fast food employees – a massive 25% increase from the $16 minimum wage.

The increase to $20 minimum wage for fast food workers went into effect in April of 2024.

A new analysis from the Employment Policies Institute of similar wage hikes forecasts how the wage San Diego hike may actually hurt the workers it aims to help.

Namely, two recent attempts to implement drastic wage hikes in California have had a significant negative impact on employment.

EPI explains:

First, the statewide $20 fast food minimum wage slashed nearly 20k jobs in two years, increased menu prices, and caused restaurants to close or stop expanding. Additionally, Los Angeles experimented with a higher minimum wage directed at the hotel industry, resulting in stagnated industry employment growth, slashed hiring and fewer job opportunities.

The increase to $20 minimum wage for fast food workers went into effect in April of 2024. The study confirms that Californians are bearing the cost of the 25% wage hike through significant job losses and steep food price hikes for consumers.

As EPI notes, San Diego’s new $25 wage mandate would be a 45% increase for hospitality businesses. Compiled data from around the state shows an additional industry-specific mandate could cost jobs and close businesses.

“The City Council chose to ignore the local and statewide experience that severe minimum wage hikes have caused tens of thousands of Californians to lose their jobs,” Rebekah Paxton, research director at the Employment Policies Institute had said about the City Council’s vote. “San Diego will be no exception to this trend. Instead of repeating failed policies that put workers at risk, local lawmakers should be heeding the cautionary tales surrounding them.”

EPI has been keeping track:

• The statewide $20 wage for fast food workers has racked up 19,102 (-3.3% loss) job losses since the law was enacted two years ago. EPI data also found the wage hike cost employees who kept their jobs nearly seven weeks worth of hours, a rash of menu price hikes, and a startling amount of restaurant closures.
• California’s fast food restaurants accounted for a quarter (25.3%) of all fast food industry job losses nationwide as a result of the $20 wage hike.
• California’s fast food industry job loss also outpaced total private industry job losses in the state, and represents nearly 10% of all statewide job losses.
• A 2015 higher wage requirement in Los Angeles City and County increased labor costs by roughly 70% for all sectors, while hotels saw a roughly 37% increase. Following the wage hikes, year-over-year employment growth virtually evaporated, falling from 6.2% in 2014 (prior to the new wage law) to 0.2% in 2024.
• West Hollywood, part of Los Angeles County, saw a 22% drop in employment after a $19.65 wage hike went into effect, with an additional 17% of workers reporting a drop in weekly hours, while many businesses were forced to close. The situation got so dire, the city council voted to delay a scheduled 2023 wage hike after hearing from distressed business owners.
• EPI also recently analyzed U.S. Census Bureau data on unemployment, and found California’s unemployment rate for teens – those more likely to work minimum wage jobs – was the highest in the country.