California's fast food wage hike eliminates thousands of jobs

In California, a new law was enacted in 2023 mandating a $20 per hour minimum wage for fast-food restaurants with over 60 locations across the country. This legislation aimed to improve economic security for lower-income workers, which Governor Gavin Newsom supported as a stride toward fairer wages. However, the initiative included an exemption for smaller chains, suggesting that the financial burden of the wage increases was too steep for those businesses with tighter profit margins. As a result, the expectation set forth by proponents of the law that it would create job stability did not hold up in practice. Research from the National Bureau of Economic Research indicated that the law prompted a 2.64% decrease in fast-food employment in California from September 2023 to September 2024. During this period, fast-food employment across the rest of the United States surged slightly, presenting a stark contrast to California's situation. The evidence pointed to a likelihood that the wage hike directly contributed to a less favorable hiring environment in the state's fast-food sector, translating to an estimated 18,000 jobs lost due to the law. Historically, many Democratic politicians have championed increments to minimum wage levels, often dismissing advisories about potential job losses. Confirming such a trend could run contrary to data collected in earlier studies from the 1990s, which suggested negligible impacts on employment from smaller wage increases. However, these past studies analyzed only minimal changes in wages and a select number of restaurants, leading to an oversimplified conclusion that minimum wage hikes wouldn't significantly influence employment numbers. The perspective held by progressive policymakers that driving the minimum wage up supports workers has increasingly been challenged by more current economic findings. Consequently, the introduction of the $20 wage floor in California suggests a growing disconnect between intended policy outcomes and the real-world implications. The costly effects of such legislation have raised questions about the priorities of governmental efforts in serving the populace effectively versus creating inadvertent barriers to employment and economic growth.