Sacramento, CA – Despite fears that increasing the minimum wage for fast food workers would be detrimental to the economy, a study by UC Berkeley economists found that raising the minimum wage increased incomes for workers, with no job cuts and food prices remaining largely stable.
The new study published by UC Berkeley’s Institute for Research and Labor Employment confirmed that California’s $20 minimum wage for fast-food workers has led to significant benefits for workers, without the devastating consequences that critics predicted. The study found that while wages have risen substantially, there has been no reduction in employment in the fast-food sector.
Governor Newsom said, “This study reaffirms that our commitment to fair wages for fast-food workers is not only lifting up working families but also strengthening our economy. The data shows that investing in workers benefits everyone — workers, businesses, and our state as a whole.”
In July, California set a record for the most fast food jobs in state history. Since the law went into effect in April, the state has gained 7,400 fast food jobs.
This study comes after corporate restaurant industry groups pushed out “fake” numbers to make it seem like thousands had been fired because of the wage increase.
The policy, which took effect in April 2024 and raised the minimum wage to $20 per hour, marks a significant shift in wage regulation. The study, released as California’s Fast Food Council considers further wage increases in 2025, presents compelling evidence that the $20 hourly wage has significantly raised worker earnings without job losses or concerning price hikes.
Sectoral Wage-Setting in California leverages novel data on wages and prices at individual restaurants, including over 11,000 reported salaries on Glassdoor. The menu price data come from over 1,500 California restaurants and a similar number in states without recent wage increases. This approach enables the authors to isolate the causal effects of the wage policy from broader market trends.
Consistent with recent minimum wage research, the findings challenge the outdated assumption that significant wage increases lead to job loss. “We find that a carefully implemented sectoral wage floor can raise worker pay without reducing the number of jobs or substantial consumer cost burdens,” says report co-author and Berkeley economics professor Michael Reich.
Below are some key takeaways from the research:
- Wages increased by 18% – For 90 percent of non-managerial workers, wages increased by 18 percent, representing a meaningful bump for workers who have historically been underpaid despite many being the primary breadwinners in their families.
- No job cuts – The wage increase did not lead to job cuts, despite what critics had said would be a doomsday for the industry.
- Profit margins were already high – The industry had been benefiting from “monopsonistic (higher than competitive) profit margins” which have “absorbed a substantial share of the cost increase.”
- 15 cents – The cost of menu options rose by only 3.7 percent, which is roughly just 15 cents for a typical $4 hamburger.
Conservatives have eggs all over their faces!
“No job cuts – The wage increase did not lead to job cuts, despite what critics had said would be a doomsday for the industry.”
I’m pretty sure the number of employees per location went down. Try to find a clerk at the front register in many fast food locations.
That had happened long before April. There’s a reason why they use data rather than observations, it’s so they can look at the effect of the policy as opposed to the trends that were in play already.
Here’s the link to the study (which is also in the article) — https://irle.berkeley.edu/wp-content/uploads/2024/09/Sectoral-Wage-Setting-in-California-09-30-2024.pdf
Fast food restaurants knew what was coming with the $20/hour wages so they started automation early. Kiosks are everywhere when it comes to fast food. I can post article after article of chains that either cut employees or cut their hours.
You clearly didn’t read the study – they compared California to other states as well.
The study came out of UC Berkeley, so how much left leaning bias was involved? Just reading the IRLE mission statement shows where they are coming from:
“Mission
The Institute for Research on Labor and Employment promotes better understanding of the conditions, policies, and institutions that affect the well-being of workers and their families and communities. We inform public debate with hard evidence about inequality, the economy, and the nature of work.”
A quick search reveals their research has been questioned many times in the past.
https://epionline.org/release/biased-uc-berkeley-research-team-not-credible-on-minimum-wage/
https://epionline.org/release/epi-criticizes-flawed-study-on-san-francisco-wage-hike-by-biased-researchers-at-uc-berkeley/
https://www.ocregister.com/2019/09/13/ucs-biased-activist-labor-research-centers/
Unless you read the study and respond to it, you’re just responding ideologically.
But was the study done with “ideologically”? Their research has been questioned in the past.
That is the question.
Read it and let me know what you think
The bottom line is whether or not the $20 fast food minimum wage law was successful, not if this study was biased. The law is an unmitigated success despite all conservative attempts to criticize it.
But you guys are trying to say that the $20 fast food minimum wage law was successful because of this study. I’m just saying that IRLE studies have been questioned in the past and is this study totally non biased?
Your argument would have more weight if you read it and pointed out what you see as the flaws. As it stands, you’re arguing it’s flawed because you think it might be biased, but you don’t know because you haven’t read it.
My personal observations in Davis, Woodland, Vacaville and Sacramento as well as this study lead me to conclude the law has met its goals. Small businesses fail in this country every day no matter which party is in power
Self service kiosks predate the implementation of the $20 fast food minimum wage law. You don’t seem to know what you are really talking about Keith. Only one of the major fast food chains in Davis that I have been to lately have kiosks at all. The other two have never had kiosks. The push to get customers to use fast food apps also predates the law in question by years.