This week, the California Business and Industrial Alliance (CABIA) released its second ad in USA Today calling out Governor Newsom for his revisionist history on the success of California’s $20 fast food minimum wage hike.
The Governor continues to cherry pick data, using whatever is politically advantageous to his narrative. But, no matter which way you look at it, the $20 minimum wage has ravaged restaurants and jobs in the fast food industry.
Since January, fast food jobs have dropped by over 5,400 and the latest-available quarterly Census of Employment and Wages shows workers have lost roughly $37 million in earnings between September 2023, when the law was passed, and March 2024.
This problem is isolated to California. When analyzing neighboring states for which data on the fast food industry is available, both Nevada and Oregon show net fast food job gains over the same period.
The ad comes as union-funded researchers at the University of California-Berkeley published a new “study” that falsely claims the wage law has not led to fewer jobs and only “modest” price increases. The study should be taken with a grain of salt, if not the whole shaker. Survey data and government data refute the main claims of the study, and economist Michael Reich, the study lead, has a concerning history of pro-labor bias in his research. Here’s just a glimpse into Reich’s concerning academic history:
- Reich is affiliated with a research team at UC-Berkeley that’s been funded by the SEIU–the same union desperately trying to defend its failed $20 minimum wage, and is currently pushing for another 3.5% wage hike. Read more about his “Research Center” here.
- Reich was previously exposed in Forbes and Seattle Weekly for working with the Fight for $15 PR team to try and undermine a report that showed the consequences of a $15 minimum wage.
- Reich and his colleague were also exposed in the Albany Times Union for working closely with the SEIU to produce research supporting a $15 minimum wage in New York.
- Reich’s research has been repeatedly discredited, both by credible academics at top research universities as well as by real-world experience. For example, Reich claimed that a $15 minimum wage in San Francisco would have “modest” impacts on businesses; in fact, research from Harvard found that the wage hike led to a rash of restaurant closures.
An EPI survey of nearly 200 California fast food operators, that cover tens of thousands of employees in the state, provides a more-credible baseline that supports the government data. The survey found that:
- A majority of restaurants say they have already raised menu prices (98%), reduced employee hours (89%), have limited employee shift pick-up or overtime opportunities (73%) and reduced staff or consolidated positions (70%) as a result of the minimum wage law.
- A majority of restaurants say in the next year they will have to raise menu prices (93%), reduce employee hours (87%), reduce staff or consolidate positions (74%), and limit employee shift pick-up or overtime opportunities (71%).
- Eighty-nine percent of owners say they are less likely to expand inside California (somewhat less likely, 16%; significantly less likely, 73%). A majority (74%) say there is an increase in the likelihood of shutting their restaurants down (somewhat increase, 38%; significantly increase, 36%).
- A majority of respondents (67%) say the minimum wage law will cost their restaurant at least $100,000 per location every year. One in four say it will cost more than $200,000 per location every year.
The bottom line is that the best available data shows jobs are being cut, workers’ hours and overtime opportunities are shrinking, menu prices are skyrocketing, and consumers just aren’t prioritizing eating out as much anymore.
It’s time for the Governor to come to grips with how many California workers and businesses have been negatively impacted by this law before moving full-steam ahead with additional hikes in 2025.