California’s fast food industry shed more than 6,000 jobs after Democratic lawmakers passed a bill mandating a $20 minimum wage for most fast food and counter service restaurants in the state, according to a new analysis of labor data.
U.S. Bureau of Labor Statistics data show that between September 2023, when California governor Gavin Newsom signed Assembly Bill 1228, and June 2024, Golden State fast food employment dropped from 570,909 jobs to 564,743. That’s a loss of 6,166 jobs, or 1.1 percent, according to an analysis by the nonprofit Employment Policies Institute.
During that same period a year earlier, California fast food restaurants added 17,528 jobs, a 3.1 percent increase over those ten months in 2022 and 2023, the data show.
“Newsom took a sledgehammer to the state’s restaurants when he signed the $20 fast food minimum wage law,” Rebekah Paxton, EPI’s research director, said in a press release. “Jobs have been smashed by thousands and the industry is struggling to stay afloat.”
The fast food minimum wage hike — a 25 percent jump over the $16 minimum wage in place for virtually every other sector of the California economy — was the result of a years-long campaign by Big Labor leaders and their Democratic allies to target an industry they’ve long struggled to organize.
In 2022, California Democrats passed the Fast Food Accountability and Standards Recovery Act, or FAST Act, which would have created an unelected fast food council that could have hiked the industry’s minimum wage to $22 an hour. The restaurant industry fought back, gathering enough signatures for a ballot initiative to challenge the act. But Democrats had a fallback plan of their own; last year, for the first time in two decades, they funded what is known as the Industrial Welfare Commission, which has the authority to regulate wages, hours, and working conditions for industries across the state.
AB 1228 was a compromise between the fast food industry and lawmakers. In exchange for eliminating the most extreme aspects of the FAST Act, the fast food industry agreed to drop its ballot initiative and raise starting pay to $20 an hour starting April 1, 2024. The $20 minimum wage is in place for fast food restaurants with at least 60 locations nationwide.
Ahead of the wage hike, some pizza chains began laying off delivery drivers and farming out delivery operations to third-party apps. Leaders of some chains acknowledged they would raise prices to cover the additional labor costs. Restaurants increasingly turned to technology and robots to increase efficiency and reduce labor costs.
Fast food restaurant owners who spoke to National Review last spring said that because of the wage hike, “everything is on the table” in terms of cost cutting. In June, Rubio’s Coastal Grill, a Mexican chain, shuttered 48 of its California restaurants, citing the “rising cost of doing business” in the state.
During the ten months when California fast food restaurants slashed 6,000 jobs, employment in fast food restaurants rose 1.6 percent nationwide, according to EPI. And while overall private employment fell slightly in California during that ten-month period, dropping 0.3 percent, the decline was steeper in the fast food industry.
In the wake of the fast food wage hike in April, California voters last month rejected Proposition 32, a ballot measure that would have increased the state’s minimum wage from $16 to $18. It was the first time in the state’s history that Californians voted down a ballot measure to increase the statewide minimum wage.