“On April 1, 2024, California raised its minimum wage from $16 to $20 per hour for fast-food workers employed at chains with more than 60 locations nationwide…Our median estimate suggests that California lost about 18,000 jobs that could have been retained if AB 1228 had not been passed,” explains a National Bureau of Economic Research working paper by Professor Jeffrey Clemens, Olivia Edwards, and Professor Jonathan Meer.
California is a high-living-cost state where businesses already had to pay relatively high wages to even low-level and unskilled employees to keep their positions filled (living costs are high in major California cities like San Francisco, San Jose, and Los Angeles). So when California raises minimum wages to a high level, the wage increase is less, and the resulting job loss is less, than it would be in another state, where wages for low-level or unskilled employees were lower to begin with.
But this study shows that even in California, if you raise minimum wages high enough, you get significant job losses.
The study’s authors note that “employment in California’s fast-food sector declined by 2.7 percent between September 2023 and September 2024 relative to fast-food employment elsewhere in the United States.” In addition, they point out that, prior to the passage of the state law increasing the minimum wage for fast-food workers, fast-food employment had been rising faster in California than in other states. Factoring that in, they estimated the job loss due to the minimum wage hike at 3.6 percent of California fast-food jobs — amounting to 18,000 lost jobs.
As Reason Magazine notes, other studies have found similar job losses over the same period:
In September, the Employment Policies Institute (EPI) drew on U.S. Bureau of Labor Statistics data to estimate “15,988 fast food jobs lost since the law went into effect in April 2024.” The group added, “California’s fast food job loss rate (-3.3% of jobs lost) more than doubled the losses in fast food restaurants nationally (-1.6% of jobs lost) since September 2023.”
That EPI memo built on a November 2024 study that found “more than 4,400 California fast food jobs have been lost since January,” based on federal data. That study also found “10.1 percent menu price increases by April 2024 since the law’s passage in 2023.”
Another study found that the fast-food industry lost 10,700 jobs between June 2023 and June 2024, at a time when it might otherwise have gained more than 12,000 jobs, suggesting a total job loss of over 20,000 jobs due to the minimum wage hike. A paper this February from Berkeley Research Group found the fast-food sector “lost 10,700 jobs (-1.9%) between June 2023 and June 2024.” The researchers added, “this decline sharply contrasts with the sector’s historically compounded annual growth rate of 2.5%” — which would have led to an increase of more than 12,000 jobs — “and marks the only December year-over-year decline in fast food employment this century–excluding the Great Recession (2009) and the COVID-19 pandemic (2020).” That report also found that “menu prices at California’s fast food restaurants increased by 14.5% between September 2023 (the month AB 1228 was signed into law) and October 2024, nearly double the national average (8.2%).”
Minimum wage hikes also harmed university research and the life sciences industry, according to recent research. Economics professor Tyler Cowen discusses “new negative results” uncovered about “minimum wage hikes.” High state minimum wage laws shrink the pipeline of people going into the life sciences industry, cut the number of students working in research labs where life-saving research is conducted, and reduce the amount of lab experience students acquire even when they do find work in a lab. These results were found in a recent study by Professor Ina Ganguli of the University of Massachusetts and Boston University Professor Raviv Murciano-Goroff.
