California's minimum wage hike results in massive job losses in fast food

In April 2024, California implemented a new minimum wage of $20 per hour for fast food workers, which directly impacted employment levels in that sector. According to a study by the National Bureau of Economic Research, this increase resulted in a notable decline in job availability, with an estimated loss of 18,000 jobs in California's fast food sector by September 2024. The study pointed out a 2.7 percent decrease in employment relative to fast food sectors in other states during the same timeframe. Additionally, many businesses began to automate their services to mitigate the effects of increased labor costs. As early as June 2024, data from Stanford University indicated that over 10,000 fast food jobs had already been shed in anticipation of these higher wages and subsequent operational changes. The Employment Policies Institute reported that non-tipped restaurant workers lost an average of 250 hours of work annually due to the law, which translated into significant income reductions. Some establishments, such as Pizza Hut, pre-emptively cut back on staff, contributing to early job losses. In response to the wage hike, there were also closures of certain fast food outlets, as many restaurants chose to implement technology solutions to replace human workers. While the office of California Governor Gavin Newsom defended the wage increase, claiming that job numbers had risen initially, this assertion was called into question as subsequent data showed the opposite trend. As of now, California holds the highest unemployment rate in the United States at 5.4%, with the fast food industry continuing to face challenges stemming from the wage increase, which has prompted significant shifts in operational strategies, including increased automation. The ongoing transformation in the fast food sector raises concerns about the balance between worker compensation and employment levels in California.