Fast-food job losses in California spiked after passage of the $20 minimum wage for some workers, according to a new study.
A Berkeley Research Group study discovered not only were there 10,700 jobs lost between June 2023 and June 2024 in the sector, according to Bureau of Labor Statistics data. But prices at the establishments soared by 14.5% after the new minimum wage became law.
“California fast food restaurants also increased automation and technology adoption to offset rising labor costs,” the study released Feb. 18 stated.
“Therefore, it should not be surprising that the number of employees per restaurant is declining.
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“Californians are bearing the cost of the minimum wage increase through fewer available jobs and higher food cost,” it added. The study also debunked notions that the minimum-wage legislation created jobs, according to the California Globe.
The study noted that the authors were “retained” by Save Local Restaurants but said the research was conducted independently.
Chef Andrew Gruel, a California-based restaurateur, told Fox News Digital he saw early on that there could be negative consequences for the service industry.
“I railed about this months ago,” he said, adding that while the early economic effects were being touted, he suggested there would be losses.
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Gruel also offered advice to businesses struggling to keep up with the minimum wage requirement.
“Cut your menu size, outsource a lot of kitchen labor and utilize AI for back office management,” Gruel said.
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The minimum wage for workers was $16 before the $20 minimum wage for fast-food workers became law in April 2024. Gov. Gavin Newsom said in September 2023 the increase would help workers earn more as the cost-of-living rises.
“Fast food workers in CA will now be paid the highest minimum wage of any state in the country. I just signed a bill that will ensure these workers receive the fair pay they deserve,” he tweeted at the time.
However, the report also cautioned that it may also result in people getting paid less overall and “accelerate automation.”
“If large enough, the combination of job eliminations and reductions could leave workers earning less income as a result of (the) $20 minimum wage,” the report stated.
“For example, even if no jobs are eliminated (a dubious assumption given the BLS data discussed above), a 20% reduction in hours worked with no overtime increases would erase the financial gains from the 25% hourly wage increase, leaving workers with the same or even less total income,” it continued.
The California Fast Food Council may consider increasing the minimum wage to $20.70, according to Restaurant Business Magazine.
