Despite headlines for over a year, numerous looks at government data sources, and reporting from restaurant operators and employees, the union-funded researchers at the UC Berkeley labor center refuse to acknowledge the state’s $20 fast food minimum wage has caused problems.
Surprisingly, the latest report from UC Berkeley’s Michael Reich actually concurs with what EPI and others have been saying for months: the $20 minimum wage has cost the state fast food jobs. But then, he introduces some math gymnastics to downplay this result.
This latest report:
- Confirms adverse effects of the law, while trying to claim otherwise: UC-Berkeley’s study confirms that the wage law has resulted in lost jobs saying:
- “Our difference-in-differences results suggest a very small (0.7 percent) negative employment effect.” (p. 8) This represents a loss of roughly 4,000 jobs; while this is on the low-end of what we believe is the likely negative impact, it still reflects a substantial blow to thousands of fast-food workers.
- Contradicts itself: In its first report, the Berkeley team said a future analysis of the wage hike would include BLS Quarterly Census of Employment and Wages data, as it “provides a near-universe of establishment level quarterly payroll reports.” Translation: The QCEW offers the best available data. However, when that data turned out to not be favorable to its narrative, IRLE’s second report downplayed the QCEW data, saying they “suggest caution when using the BLS’ Current Employment Survey or its Quarterly Census of Wages and Employment (QCEW) to analyze the effects of the policy.” This inconsistency—and apparent willingness to alter its research approach in an effort to manufacture a particular outcome or narrative—is consistent with the group’s track record. See more below.
- Contains statistical sleight-of-hand: Michael Reich compares fast food restaurants to full service restaurants in his “triple difference in differences approach.” This is disingenuous because full-service restaurants are also reported to be suffering from similar wage and hour mandates. To compare the fast food employment crisis to a full-service restaurant crisis when both are reportedly suffering from labor cost issues does not mean the $20 fast food wage has not had an impact on employment. It means the war unions are waging on sit-down restaurants has found another target: The fast food sector.
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- Our Fall 2024 rebuttal to Reich’s original paper found California’s fast food job losses are unique compared to employment growth for all industries in California during the same time frames.
- Ignores real-world reports of the law’s consequences: The Berkeley study also dismisses restaurants’ proactive business adjustments–such as price hikes–as “implausible,” but the evidence shows the contrary. Reports of price hikes (listed above) began flooding in at the end of 2023, and beginning of 2024. Outlets like the Wall Street Journal reported business closures and price hikes, attributing the changes to the wage law. And, as we noted above, our survey of operators found 98% had already raised menu prices.
Responding to Berkeley and Reich’s original claims made in Fall 2024, EPI found that the $20 minimum wage 1) cost fast food jobs, 2) these losses are not occurring in the national fast food industry, and 3) spiked fast food restaurant prices.
Diving deeper, a few months later EPI examined the gold standard source of government data to measure employment trends (even by Reich’s standards). This data confirmed what we already knew, and what those on the ground in California had been saying for months: California’s fast food job decline not only cost over 6,000 jobs in the industry since the $20 wage law’s passage, but nearly quadrupled total private employment decline in the state, and diverges from the previous year’s fast food trend where employment growth was booming.
Despite Berkeley’s best attempts, the true devastating impacts of California’s fast food wage law are impossible to ignore.