California’s minimum wage increase led to job losses, higher prices: Study

• A new study shows that California’s minimum wage increase for fast-food workers led to job cuts, higher menu prices and increased automation. In April 2023, California raised the minimum wage for fast-food workers from $16.50 to $20 an hour.
• Specifically, between June 2023 and June 2024, 10,700 fast-food jobs were lost, and menu prices rose by 14.5%. Meanwhile, nearly 89% of restaurant operators reduced employee hours and replaced labor with technology, as 35% cut employee benefits.
• The study concluded that Californians are facing fewer job opportunities and higher food costs due to the wage hike.

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A new study revealed that California’s minimum wage increase for fast-food workers resulted in job losses, higher menu prices and greater automation in the industry. In April 2023, California raised the minimum wage for fast-food workers from $16.50 to $20 an hour.

“We have the opportunity to reward [the contribution of fast-food workers], reward that sacrifice, and stabilize an industry in turn,” Gov. Gavin Newsom said when signing the bill into law in September 2023. “What a remarkable moment.”

What changed at fast-food restaurants?

Now, less than a year since the pay hike took effect, a study conducted by the Berkeley Research Group shows that between June 2023 and June 2024, 10,700 fast-food jobs were lost in California, citing data from the Bureau of Labor Statistics.

Fast food menu prices also increased by 14.5% between September 2023 and October 2024—nearly double the national average.

The study found that nearly 89% of the state’s fast-food restaurant operators reduced and capped employee hours, while offsetting rising costs by increasing automation and technology.

Operators replaced labor-intensive roles, such as cashiers, with self-serve kiosks and computerized ordering systems, eliminating some positions.

According to the study, this shift “reduced the number of jobs available for lower-skilled workers, such as those without a high school diploma or equivalent, who may not meet the qualifications for a higher-wage position.”

What else did operators change?

Additionally, 35% of operators reduced supplemental employee benefits, and 87% said they plan to make further reductions in the coming year.

“Californians are bearing the cost of the minimum wage increase through fewer available jobs and higher food costs,” the study’s authors concluded.

During the week of Feb. 24, In-N-Out Burger announced it will be moving its headquarters from California to Tennessee.