A report recently released by researchers at the Institute for Research on Labor and Employment (IRLE), a union-funded project housed at the University of California-Berkeley, echoes Governor Gavin Newsom’s media campaign that the recent $20 fast food minimum wage has not been a disaster.
Yet Californians for months leading up to the new law, which went into effect April 1, 2024, have seen headlines of widespread layoffs, menu price increases, restaurants turning to automation, and even restaurant closures.
So which scenario is true?
We dove into the IRLE report methods, and found that while it touts the same data points as the Governor, it leaves out the best, widely-used data sources on employment that comes from the federal Bureau of Labor Statistics (BLS).
The Berkeley authors claim they “do not detect evidence of an adverse employment effect.” There are several issues with the analysis they present.
They use monthly non-seasonally adjusted numbers to make these assumptions. On the contrary, monthly data that have been revised by the Bureau of Labor Statistics for seasonal factors shows California has a net loss of employment since the beginning of the year.
When using the BLS revised data set that accounts for normal seasonal variation that occurs unrelated to policy changes, California’s fast food industry currently reports a net loss of more than 5,400 jobs since January 2024, when state and national news outlets began reporting concerns brewing over the upcoming implementation of AB 1228 and the $20 minimum wage in April.
They also claim that California’s trends are not statistically unique, and therefore employment changes cannot be attributed to the new AB 1228 law (pages 11-12). This is again false: California’s fast food industry employment has dropped compared to its total and full-service restaurant industry employment (which is not subject to the $20 minimum wage standard). When looking at employment changes from the most recent period (August 2024) since the end of last year, the fast food industry is the only sector that has experienced negative net job loss.Compare this to the same time frame last year. Fast food jobs in California had positive growth from December 2022 to August 2023, as did full-service jobs, all service-providing jobs, and all non-farm jobs.
In summary, the only sector and time frame in which California experienced a negative job loss for the purposes of this analysis was in the fast food industry from December 2023 to the present. These trends are also unique from other West Coast neighboring states Oregon and Nevada.
When analyzing fast food industry employment data from these states, California’s industry losses are an outlier. Neighboring states Oregon and Nevada, the only West Coast neighbors with fast food industry-level data both experienced net increases in fast food jobs over the same period (January 2024 to the present).
The best available data confirm these monthly trends.
Researchers from IRLE concur that the Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW) is one of the best datasets to measure employment changes.
Data from the QCEW lags several quarters behind because it compiles based on actual employer filings and represents more than 95% of all employers.
While data do not yet exist for the period following April 1, earlier data confirm trends in the monthly estimates and headlines regarding layoffs reported months before the law took effect.
In conclusion, seasonally revised monthly data and quarterly data with better coverage of all employers show California is losing fast food industry jobs at unprecedented levels.