Blue state fast-food wage hike risked jobs

Fast-food job losses in California saw a significant increase following the passage of a $20 minimum wage for some workers, according to a recent study conducted by the Berkeley Research Group. The study revealed that between June 2023 and June 2024, a total of 10,700 jobs were lost in the fast-food sector, based on data from the Bureau of Labor Statistics. Additionally, prices at fast-food establishments soared by 14.5% after the implementation of the new minimum wage law.

The study also highlighted that California fast-food restaurants turned to increased automation and technology adoption in order to offset the rising labor costs. As a result, the number of employees per restaurant has been on the decline. This shift towards automation and technology has been a response to the financial strain caused by the higher minimum wage.

The authors of the study, who were retained by Save Local Restaurants, emphasized that the research was conducted independently. Chef Andrew Gruel, a well-known California-based restaurateur, expressed his concerns early on about the negative consequences that the service industry may face as a result of the minimum wage increase. He suggested that businesses struggling to meet the minimum wage requirement should consider cutting their menu size, outsourcing kitchen labor, and utilizing AI for back-office management.

Prior to the $20 minimum wage, the minimum wage for fast-food workers in California was $16. Governor Gavin Newsom defended the wage increase, stating that it would help workers earn more in light of the rising cost of living. However, the report cautioned that the wage increase may lead to people earning less overall and could accelerate automation in the industry.

In light of the findings, the California Fast Food Council is reportedly considering raising the minimum wage even further to $20.70. This potential increase could have further implications for the fast-food industry in the state.

Overall, the study sheds light on the complex effects of minimum wage increases on the fast-food sector in California. As businesses navigate the challenges posed by higher labor costs, it remains to be seen how the industry will continue to adapt in the face of these changes.