A recent study has shed light on the actual consequences of California’s decision to raise the minimum wage for fast food workers to $20 per hour, countering earlier industry-led fears. Since the implementation of the new law in April 2024, California’s fast food sector has not experienced the predicted job losses. In fact, quite the opposite has occurred.
Contrary to dire predictions from corporate restaurant lobbyists who disseminated misleading figures of potential mass layoffs due to increased labor costs, the fast food industry in California is thriving. July saw a record number of fast food jobs in the state’s history, with an addition of 7,400 jobs since the $20 minimum wage came into effect. This robust job growth directly contradicts the “fake” numbers and narratives pushed by some industry groups prior to the wage increase.
A comprehensive new study from the Center on Wage and Employment Dynamics at UC Berkeley provides a detailed analysis of California’s sectoral wage-setting policy. This policy, a landmark move in wage regulation, mandated the minimum wage increase for fast food employees. As the California Fast Food Council deliberates further wage adjustments for 2025, this study offers timely and crucial insights into the policy’s real-world impact. The research, titled “Sectoral Wage-Setting in California“, utilizes extensive data, including over 11,000 salary reports from Glassdoor and menu pricing from over 1,500 California restaurants, alongside comparable data from states without recent wage hikes. This rigorous methodology allows for a clear assessment of the wage policy’s direct effects, separate from broader economic trends.
The study’s key findings reveal a positive outcome for workers and a stable industry:
- Significant Pay Increase: Fast food workers experienced an 18% surge in their hourly earnings. Notably, 90% of workers in large fast food chains were earning less than $20 per hour before this policy, indicating a substantial positive impact on their income.
- No Job Losses: Despite industry concerns, the anticipated job cuts did not materialize. Employment levels in the fast food sector remained stable, demonstrating that increased wages did not equate to fewer jobs.
- Minor Price Adjustments: Menu prices saw a modest 3.7% increase. For context, this translates to roughly a 15-cent increase on a $4 hamburger – a minimal price change for consumers.
These findings align with contemporary minimum wage research, challenging outdated assumptions that wage increases inevitably lead to job losses. Professor Michael Reich, co-author of the report and an economics expert at Berkeley, states, “We find that a carefully implemented sectoral wage floor can raise worker pay without reducing the number of jobs or substantial consumer cost burdens.”
California’s pioneering sectoral wage policy serves as a significant experiment on a large scale. Its apparent success could set a precedent for similar policies in other states and across various industries. California is already preparing to extend this approach to healthcare workers, further emphasizing its commitment to sectoral wage policies. This UC Berkeley study provides policymakers with crucial, evidence-based insights into the effects of such policies on wages, employment, and prices, demonstrating that a higher minimum wage for fast food workers in California has resulted in better pay without harming job numbers or causing significant price inflation.
For those seeking deeper insights, a virtual press briefing is scheduled for tomorrow, October 1st, where the authors will discuss the report’s findings, research methodology, and policy implications in detail. Read the full report to explore the comprehensive analysis.
