Work Decoded

The California Job-Killer That Wasn’t

The state raised the minimum wage for fast-food workers—and employment kept rising. So why has the law been proclaimed a failure?

The Truth About California's Fast Food Minimum Wage: Data vs. Narrative

When California passed legislation raising fast-food workers' minimum wage to $20 per hour, critics were quick to predict disaster. Business groups, Republican politicians, and media outlets warned of massive job losses and widespread restaurant closures. Former President Trump cited California as a cautionary tale, claiming restaurants were "going out of business all over the place."

But the data tells a different story. Since the law took effect in April, California's fast-food sector has not only maintained employment levels—it has added jobs at a faster rate than much of the country. This outcome challenges long-held assumptions about minimum wage increases and reveals how economic misinformation can spread despite contrary evidence.

## The Evolution of Minimum Wage Economics

Traditional economic theory suggested a simple equation: higher wages mean fewer jobs. However, decades of real-world research have painted a more nuanced picture. Studies examining over 500 minimum wage increases across the United States have consistently shown minimal impact on employment, with some cases even showing job gains.

The explanation lies in the unexpected benefits of higher wages. When pay increases, workers tend to stay in their jobs longer. This reduced turnover saves employers money on recruiting and training while increasing worker productivity. Businesses also adjust through a combination of slightly higher prices and reduced profit margins.

## California's Bold Experiment

The state's move to raise fast-food wages from $16 to $20 per hour—applying to chains with more than 60 locations nationwide—represented an unprecedented increase. Industry response was swift and dire. Pizza Hut franchises announced delivery driver layoffs, Burger King owners warned of reduced hours, and Rubio cited the law in announcing store closures.

These predictions spawned numerous negative headlines. However, closer examination revealed fundamental flaws in the data being cited:

1. A widely circulated claim of 10,000 lost jobs, published by the Hoover Institution, failed to account for normal seasonal employment fluctuations. When properly adjusted for seasonality, the data actually showed a gain of over 5,000 jobs.

2. Later industry reports showing job losses relied on carefully selected timeframes that obscured overall employment growth. Looking at consistent year-over-year comparisons showed job gains in nearly every month since the law's passage.

## The Real Impact

Recent academic research from UC Berkeley compared California's fast-food employment to states with a federal minimum wage of $7.25. The findings were striking: California's fast-food employment grew slightly faster than comparison states after the wage increase. Additional research found no reduction in worker hours or benefits.

The law did lead to some price increases—about 3.7% at fast-food restaurants. While significant, this is far less than critics predicted and considerably smaller than the 18% average wage increase workers received. The difference was absorbed through reduced worker turnover and lower franchise profits.

## The Power of Narrative

Despite the policy's apparent success, persistent negative coverage has shaped public perception. In November, California voters rejected a broader minimum wage increase following an industry campaign that characterized the fast-food experiment as a failure.

This disconnect between data and narrative has implications beyond California. Twenty states—19 of which supported Trump in 2024—still maintain minimum wages at or below the federal level of $7.25. While California's policy certainly deserves scrutiny in many areas, the evidence suggests its minimum wage increase has achieved its core aims without triggering the predicted downsides.

For states seeking to support working-class voters who overwhelmingly favor minimum wage increases, California's experience offers valuable lessons—provided they can look past the headlines to examine the actual results.