USA 
United Kingdom
Job losses in California’s fast food sector have been blamed on the introduction of a $20 hourly minimum wage.
According to recent federal data and multiple studies, the new law has led to widespread employment declines, cuts to worker hours, and increased automation as businesses adjust to rising labor costs.
The National Bureau of Economic Research found that “employment in California’s fast food sector declined by 2.7 percent relative to employment in the fast food sector elsewhere in the United States from September 2023 through September 2024.” When adjusting for previous trends and comparing to less wage-sensitive industries, the employment gap widened to 3.2%.
Economic impact hits jobs, hours and operations
The study’s authors estimated “a loss of 18,000 jobs in California’s fast food sector relative to the counterfactual.” They also reported an “8% increase in California’s fast food sector relative to the fast food sector elsewhere in the country,” showing that wages rose while employment declined.
US jobs threat | Will US staff be axed as Panasonic cuts 10,000?
Employment changes in non-minimum-wage-intensive sectors showed that “California’s non-minimum-wage-intensive employment was on a slower growth trend than the rest of the United States prior to the implementation of its fast food minimum wage.”
One model found a triple-difference estimate of -2.6%, while a detrended version placed the figure at -3.9%.
The data indicates that “it is possible that AB 1228 has led full-service restaurants to have more difficulty attracting workers, or that those employers anticipate future minimum wage increases in their sector as well.”
AB 1228 is the minimum wage law code.
Restaurants reduce hours, automate tasks
The Employment Policies Institute estimated that “non-tipped restaurant workers [lost] 250 hours of work annually,” translating into up to $4,000 in lost income. That drop equates to seven weeks of work each year per employee.
The California Globe reported that “thousands of fast food jobs were shed by companies in anticipation for the higher costs,” including 1,200 drivers at Pizza Hut. Once the law took effect on April 1, 2024, “restaurants automated what they could to avoid the higher wages,” and “some fast food restaurants also closed.”
By June 2024, Stanford University data indicated “over 10,000 fast food jobs were already lost.” While the Governor’s office disputed the figure, saying fast food jobs had increased, it “stopped by the fall when it became apparent that federal data wasn’t on their side.”
Voter backlash followed, as “by November, the losses stemming from AB 1228 irked voters so much that they voted soundly against Prop 32, which would have raised the minimum wage statewide to $18.”
