California's controversial $20 minimum wage for fast-food workers has resulted in significant job losses according to newly revised employment data, contradicting earlier studies that claimed minimal impact from the wage increase.
A March 2025 analysis by economist Christopher Thornberg reveals that California's fast-food industry lost over 23,100 jobs in the past year following implementation of the state's Fast Act, which raised the minimum wage for chain restaurants to $20 per hour in April 2024.
"These findings undercut much of the recent analysis released by pro-labor groups which has been claiming that the Fast Act has had little impact on limited-service restaurant industry in California," Thornberg wrote in his report.
The California Employment Development Department recently released its January 2025 employment report with revised estimates for the previous 18 months. These revisions lowered the state's overall job count by 92,100 positions (about 0.5%) for December 2024, with limited-service restaurants seeing a disproportionate reduction of 21,500 jobs, representing a 2.5% decrease in the sector.
While initial estimates had suggested little change in fast-food employment throughout 2024, the revised data shows the sector actually lost 3.2% of its workforce during the past 12 months. This stands in stark contrast to the national trend, where fast-food employment increased by 0.8% over the same period.
Overall employment in California grew by just 0.2% during this time, compared to 1.2% growth nationwide.
Thornberg, who works with Beacon Economics, argues the negative employment effects were predictable but took time to appear in official statistics. The revised figures incorporate data from the U.S. Bureau of Labor Statistics' Quarterly Census of Employment and Wages, which is based on actual employer-reported payroll records rather than the surveys and estimates used for monthly employment reports.
"The fact that we had to wait for the revisions to actually see the fast-food job losses is part of the evidence for what is happening," Thornberg writes.
He contends that previous analyses declaring the Fast Act a success were premature because "the impact of this kind of policy change doesn't show up clearly in the data for many months, given that it takes time for the industry to adapt to the sharp increase in labor costs and also because much of the most relevant data is lagged in terms of collection and release."
Thornberg notes these numbers may actually understate the true impact since approximately half of limited-service restaurants included in the sector's overall figures are not part of chains and therefore not subject to the $20 minimum wage requirement.
The Fast Act (AB 1228) raised the minimum wage for franchised fast-food restaurants to $20 per hour beginning April 1, 2024—$4 higher than California's standard minimum wage. The law applies specifically to chain restaurants with 60 or more locations nationwide, creating what Thornberg describes as a "natural experiment" for studying minimum wage effects.
The legislation emerged from a contentious battle between labor unions and the fast-food industry. In 2022, the Legislature originally passed a union-backed bill that would have raised the minimum wage to $22 and declared fast-food franchises as subsidiaries of parent chains rather than independent businesses.
The industry responded with a referendum to overturn the law, but a potential ballot fight was averted in 2023 with compromise legislation that mandated a $20 minimum wage and set aside the franchise status issue while creating the Fast Food Council to oversee pay and working conditions.
The debate over minimum wage impacts has divided economists for decades. While Thornberg notes that "the median view among economists is that there is a clear, albeit proportionate, negative impact from wage floors," he acknowledges that "a vocal segment within the economics field claim the impacts are largely insignificant."
Prior to these employment revisions, several research groups had published analyses suggesting minimal negative effects from the Fast Act.
Harvard's Kennedy School and UC San Francisco researchers released a study in October 2024 that found "California fast food workers experienced substantial wage increases" with "no evidence that wage increases had unintended consequences on staffing, scheduling, or wage theft."
That study, based on survey data from over 3,400 fast-food workers, concluded that "hourly wages for California fast food workers increased by at least $2.50" after the law took effect, with the share of workers earning less than $20 per hour declining by about 60 percentage points.
The researchers found "no evidence that employers turned to understaffing or reduced scheduled work hours to offset the increased labor costs" and reported that "weekly work hours stayed about the same for California fast food workers."
Similarly, UC Berkeley's Institute for Research and Labor Employment concluded the policy "increased average hourly pay by a remarkable 18 percent, and yet it did not reduce employment," while increasing prices "about 3.7 percent, or about 15 cents on a $4 hamburger."
Gov. Gavin Newsom has cited these findings, declaring in October that "the data shows that investing in workers benefits everyone—workers, businesses, and our state as a whole."
However, Thornberg argues these conclusions were made "much too early" and calls on the Fast Food Council to "pause any further changes until more thorough, unbiased research is conducted" as the industry faces potential additional impacts beyond job losses.
