California’s $20 Wage Law Cost Restaurant Workers 7 Weeks Worth of Work

The Employment Policies Institute just released new data showing AB 1228, California’s $20 wage law for fast food workers, cost non-tipped restaurant workers 250 hours of work annually, equating to up to 7 weeks of lost work – up to $4,000 in lost potential income.

As the Globe warned, thousands of fast food employees lost jobs, employees’ hours were cut, and business owners had to do more with less.

The new data comes just over one year after AB 1228’s implementation, and as Los Angeles considers a drastic union-backed $30 wage hike for hotel and tourism workers that would follow the fast food wage law’s precedent of economic destruction, EPI reports.

According to EIP, “Regardless of the time period chosen, nontipped restaurant workers worked fewer hours in every phase following the passage of the $20 minimum wage law. Following Governor Gavin Newsom’s signature in September 2023, restaurants began bracing for the impact of the 25% wage hike in Fall 2023 and early 2024, based on national and local reporting including in the Wall Street Journal, Sacramento Business Journal, and Fox Business.”

In March the Globe reported that by the time California Governor Gavin Newsom signed into law the $20 minimum wage for fast food workers, he had been warned by many that it would be devastating for the industry, but he did it anyway. Now, 16,000 fast food jobs have been lost and fast food prices are up more than 14.5%. And here is why: the $20 minimum wage harms California’s least skilled and least experienced workers, as they are no more productive, but are significantly more expensive, and results in harms the business owners as well.

We reported: “A new analysis from the Employment Policies Institute of quarterly data from the Bureau of Labor Statistics revealed that California has lost as many as 16,000 jobs since the state’s $20 fast food minimum wage law was signed in September 2023. (The state is down nearly 14,000 jobs since the law officially took effect in April 2024.) The data includes mandatory reporting from all fast food establishments and covers the first six months since the implementation of the law. See the monthly changes here:

EPI reports, “Unions pushing for unprecedented high wages claimed workers’ pay was being stolen from them via alleged “wage theft.” Yet EPI analysis found statewide, the fast food industry was responsible for a disproportionately low share of all filed wage claims – just 1.6 percent, up to five times lower than other heavily-unionized industries such as construction, manufacturing, or transportation.”

“The data on AB 1228’s negative effect on employment shows this “solution” has created even bigger problems – for a so-called problem that didn’t exist in the first place.

The data is clear: the real culprit taking pay away from California’s employees is the skyrocketing minimum wage mandates, EPI concludes.

“Governor Newsom’s ‘modest’ law took a sledgehammer to the fast food industry,” said Rebekah Paxton, research director at the Employment Policies Institute. “Tens of thousands of workers have lost their jobs, and now new data shows that even those who have kept their jobs have lost nearly two months worth of potential work hours from their schedules. This is unsustainable. Workers deserve better than empty pockets and broken promises.”

Emblematic of this situation is Kevin Dalton’s X post:

Laughably, Gov. Newsom and his staff actually claimed “California has added jobs in limited service restaurants (fast food) both since Gov. Gavin Newsom signed AB 1228 the FAST Recovery Act in September 2023 and since the law’s new $20 minimum wage for fast food workers took effect April 1, 2024.” (emphasis Gov. Newsom’s office)

When the fast food minimum wage was bumped up to $20 an hour from the statewide $16 minimum wage in April, the fast food industry struggled. Some, like Chipotle and McDonalds, raised prices. Others invested in automated kiosks and other automated devices to help reduce the number of employees. Some stores outright closed, such as most Rubio’s Coastal Grill locations in California, the Globe reported.

EPI offers additional background:

• According to the latest available quarterly data from the Bureau of Labor Statistics representing 95% of employers, California has lost as many as 16,000 jobs since the state’s $20 fast food minimum wage law was signed in September 2023. (The state is down nearly 14,000 jobs since the law officially took effect in April 2024);
• The state has seen the worst fast food job growth rate since the Great Recession;
• A study by the Berkeley Research Group found that menu prices have increased 14.5% due to the $20 wage hike;
• After the implementation of the $20 minimum wage law, an EPI survey found that a majority of restaurants say they had raised menu prices (98%), reduced employee hours (89%), limited employee shift pick-up or overtime opportunities (73%), and reduced staff or consolidated positions (70%) as a result of the minimum wage law;
• Additionally, a majority of restaurants surveyed said in 2025 they will have to raise menu prices (93%), reduce employee hours (87%), reduce staff or consolidate positions (74%), and limit employee shift pick-up or overtime opportunities (71%).