An In-N-Out employee directs traffic toward the drive-thru in Rancho Mirage, January 7, 2022. In N Out Rancho Mirage 6
California – A new study by economists from UC San Diego and Texas A&M suggests that California’s recent $20 minimum wage for fast food workers may have contributed to a decline in employment across the sector. Using comprehensive employment data, the authors estimate that the state lost roughly 18,000 fast food jobs between September 2023 and September 2024 compared to what might have occurred without the policy change.
The wage hike, passed as Assembly Bill 1228 in September 2023 and implemented in April 2024, marked one of the largest one-time minimum wage increases in U.S. history—raising hourly pay by $4 for workers at chains with more than 60 locations nationwide. The law also established a Fast Food Council to develop standards for wages and working conditions.
According to the study, fast food employment in California dropped by 2.7 to 3.9 percent, depending on methodology. These estimates account for seasonal patterns and pre-existing economic trends, and they reflect comparisons with both other states and with non-minimum-wage-intensive industries in California. By the most conservative count, this represents a shortfall of nearly 3.2 percent—translating into tens of thousands of lost positions in the industry.
The findings arrive amid broader debates over the effects of minimum wage policies on labor markets. Supporters of the $20 wage argue it brings long-overdue equity to an industry known for low pay and high turnover. For workers in one of the country’s most expensive states, $20 an hour is a baseline, not a luxury. Critics counter that steep wage mandates—especially when concentrated in a single sector—can prompt employers to cut jobs, reduce hours, or automate tasks.
Still, causation remains complex. The study’s authors acknowledge that not all of California’s labor shifts can be attributed solely to the new minimum wage. Several large cities already had higher minimums in place before AB 1228 took effect, and other states also raised wages during the same period. Broader economic trends, including shifts in consumer behavior and post-pandemic adjustments in the restaurant industry, may also have played a role.
What’s clear is that California’s policy experiment provides a high-profile case study in the real-world effects of sector-specific wage regulation. As policymakers across the country look to balance the needs of workers with the realities of business operations, the state’s fast food industry may serve as both a cautionary tale and a proving ground for future labor reforms.
