Sacramento, CA — California’s fast-food minimum wage, raised to $20 per hour in April 2024, was designed to help low-wage workers cope with the state’s high cost of living. But new research shows the policy may have come at a price: a decline in jobs across the sector.
Job Losses Followed the Wage Hike
According to a new study from the National Bureau of Economic Research (NBER), employment in fast-food restaurants dropped by 2.64% from September 2023 to September 2024. This translates to approximately 18,000 lost jobs, in contrast to an increase in fast-food jobs nationally during the same period.
“Our median estimate translates into a loss of 18,000 jobs in California’s fast-food sector relative to the counterfactual,” wrote researchers Jeffrey Clemens, Olivia Edwards, and Jonathan Meer in their July 2025 report.
The study raises concerns that politically popular policies — like higher minimum wages — may carry unintended economic consequences for workers they aim to support.
How the Law Works and Who It Targets
Governor Gavin Newsom signed the law into effect, boosting wages from $16 to $20 per hour for fast-food restaurants with at least 60 locations nationwide.
In January 2025, the state also empowered a Fast Food Council to propose annual adjustments. The Council has already suggested a $0.70 wage increase, which remains under review.
In-N-Out and Industry Pushback
Major fast-food chains fought hard against the legislation, including In-N-Out, which committed $12.8 million in 2022 and 2023 to the Save Local Restaurants committee opposing the law. Despite the lobbying, a deal between state legislators and labor unions pushed the bill forward in 2024.
The burger chain, known for its relatively high wages and service standards, reportedly needed to increase hourly pay to $23–$24 to maintain its customer experience. In response, In-N-Out raised menu prices to offset rising labor costs.
Independent Research Echoes Job Decline
Another study, conducted by the Berkeley Research Group and funded by Save Local Restaurants, found similar results. Between June 2023 and June 2024, the sector saw:
- 10,700 jobs lost
- 14.5% increase in menu prices
- 98% of restaurants raising prices
- 93% reducing employee hours
- 70% cutting positions or consolidating roles
“The wage increase law led to real and measurable losses in jobs and work hours,” the study concluded.
Other Experts Dispute the Negative Impact
In contrast, a September 2024 study from researchers at UC Berkeley, UC San Francisco, and Harvard University reached very different conclusions.
“We find that the policy increased average hourly pay by a remarkable 18 percent, and yet it did not reduce employment,” said the study from the UC Berkeley Institute for Research and Labor Employment.
The same research noted that prices only rose 3.7%, or roughly 15 cents on a $4 burger, contradicting industry warnings about dramatic inflation.
“Contrary to industry claims of larger increases, the impact on consumers was modest,” the researchers added.
The Debate Continues
As California pushes forward with labor reform, the long-term effects of the $20 fast-food wage remain hotly contested. With further wage adjustments under review and consumer prices still rising, the question remains: Can higher pay and job stability truly coexist in the fast-food sector?
What are your thoughts on this? Let us know in the comments.
