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Study Connects California QSR Wage Hikes with Job Reduction
In 2023, California Gov. Gavin Newsom signed Assembly Bill (AB) 1228, which authorized an increase of minimum wage for many employees of national food chains to $20 per hour. Early research posted by the University of California-Berkeley’s Labor Center reported that fast-food workers’ wages increased, while employment did not.
However, a study conducted by Pepperdine University’s School of Public Policy and Beacon Economics reported that the limited service restaurant sector lost 23,100 jobs since April 2024, when the legislation was implemented. The 3.2% decrease in jobs was in stark contrast to the 0.8% growth of overall U.S. fast-food jobs. “The findings suggest that early claims of the Fast Act’s success were premature and based on incomplete data,” said a release announcing the study’s white paper entitled “Jumping the Gun on the Fast Act.”
The white paper’s author, Christopher Thornberg, PhD, explained that the data analyzed came from the California Employment Development Department’s January 2025 report. The information, issued on March 14, revised employment estimates for the past 18 months, lowering the number of payroll jobs by 92,100. “The declines were concentrated in a few sectors, including limited-service restaurants (fast food), where the number of jobs was revised down by 21,500 or 2.5% in December,” wrote Thornberg, Beacon Economics’ Founding Partner.
The white paper also anticipated that as more information becomes available, AB 1228’s negative impacts could go beyond employment numbers and encompass lost hours and shuttered restaurants.
Thornberg contended that earlier studies relied on preliminary data, rather than the revised data issued in March. “Each year, California revises its employment data through a process called benchmarking, which aligns preliminary employment estimates with more accurate and comprehensive data,” he wrote. “These revisions can lead to meaningful changes in previously reported job gains or losses.”
Thornberg also noted that the numbers could understand the impact, as nearly half of QSRs included in the sector’s numbers aren’t part of a national chain, and not subject to the $20 minimum wage. “Their employment growth or stability may be masking even greater job losses among the restaurants that are subject to the policy,” he said.
The study concluded that early claims of AB 1228’s success were based on incomplete data. “This new data should be a wake-up call for policymakers,” Thornberg said in a statement. “The employment losses in California’s fast-food industry are now evident, and they confirm what many had warned about: drastic wage hikes create real economic consequences, especially for entry-level workers.”
- ◦People
- ◦Economy
- ◦Policy/Gov't
