SEIU Researchers Admit $20 Wage Law Caused Fast Food Job Losses

Last week the Globe reported on a new study by the Berkeley Research Group admitting that California’s $20 minimum wage for fast food workers has led to job losses, higher food prices, and increased automation in the industry.

The BRG study found, “California’s fast-food restaurants lost 10,700 jobs between June 2023 and June 2024, making it the worst performing year outside of a recession, and the COVID-19 pandemic. Additionally, food prices at local restaurants have increased by 14.5% since the legislation was signed, nearly double the national average.

The Employment Policies Institute (EPI), which has consistently reported on the economic devastation by the $20 minimum wage for fast food workers weighs in on the study by the SEIU.

As EPI notes, the evidence is from an unexpected source: “…the same labor union that pushed for the $20 policy.”

“EPI has been a leading voice on the consequences of this law, releasing multiple reports based on government data that show the state’s $20 minimum wage is costing jobs. In an attempt to cover up these consequences, unions have supported biased researchers who are supportive of $20.”

In July, the Globe reported that fast food franchise owners were already experiencing store closures, layoffs, cutting back on employee hours, or even considering moving out of state. In a survey conducted by the Employment Policies Institute of 200 fast-food companies, 89 percent of those eateries already had been forced to reduce scheduled hours for their employees. The survey also found:

• 98% California fast-food restaurants said they raised menu prices.
• 89% reduced employee hours.
• 73% limited employee shifts or overtime.
• 70% reduced staff or consolidated positions.

In their latest report, EPI says that SEIU’s research team acknowledges a “negative employment effect” from the $20 minimum wage – which translates to some 4,000 jobs lost. While this figure is at the low end of what other data sources estimate, it is a shocking confirmation that the SEIU/Newsom $20 minimum wage law has hurt workers.

“Congratulations to the Berkeley team for coming to their senses and admitting the $20 wage law has cost jobs,” said Rebekah Paxton, research director at the Employment Policies Institute. “Their report acknowledges what everyone has been saying for over a year, and the Fast Food Council should act with caution before enacting further wage hikes.”

EPI lists the key takeaways from the SEIU-Backed Report:

The report’s author confirms that the wage law has resulted in lost jobs, saying:

“Our difference-in-differences results suggest a very small (0.7 percent) negative employment effect.” (p. 8) This represents an estimated loss of roughly 4,000 jobs; while this is on the low-end of what government data shows is the likely negative impact, it still reflects a substantial blow to thousands of fast-food workers.

The report then attempts to cover up these negative impacts of the law, by comparing declining employment in fast-food restaurants to declining employment in full-service restaurants.

But full-service restaurants are also struggling under California’s onerous union-supported wage and labor mandates. Ironically, by comparing the decline of the two industries, the report shows the dual damage of a higher minimum wage.

EPI accounted for this in its November 2024 report finding California’s fast food job losses are nearly four times steeper than total private employment growth for all industries in California during the same time frames.

The report further dismisses restaurants’ proactive business adjustments–such as price hikes–as “implausible” (p. 11). This statement runs contrary to published reports.

Restaurant operators and employees have repeatedly stated in the media, beginning in the Fall of 2023 after Gavin Newsom signed the $20 wage law and early 2024 in outlets like the Wall Street Journal, which reported businesses were raising prices, downsizing their staff, and shutting down in anticipation of the law’s effective date on April 1, 2024.

The $20 fast food minimum wage law, AB 1228, was signed into law in October 2023 by Governor Gavin Newsom, was a massive 25% increase from the previous $16 minimum wage.

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

As the Fast Food Council’s Planning Subcommittee prepares to meet today, the Globe hopes they acknowledge that another wage increase in 2025 could further harm the restaurant industry, as well as the California economy.

Key Findings from the Berkeley Research Group study:

• 10,700 Jobs Lost: According to U.S. Bureau of Labor Statistics (BLS) Quarterly Census of Employment and Wages data, California’s limited-service restaurant lost 10,700 jobs (-1.9%) between June 2023 and June 2024—marking the steepest decline this century outside of the Great Recession (2009) and the COVID-19 pandemic (2020).
• 14.5% Increase in Food Prices: Since the legislation mandating the $20 minimum wage for fast food workers was signed in September 2023, food prices at California’s local restaurants have increased by 14.5%—nearly double the national average (8.2%).
• Technology and Automation Replacing Workers to Offset Increased Labor Costs: Restaurants have accelerated the use of ordering kiosks, AI drive-thru systems, and robotic kitchen automation, reducing available entry-level jobs and shrinking employment per location.