In every way, California’s minimum wage hike for fast food workers is failing | Opinion
California’s fast food minimum wage law, which imposed severe cost increases on small businesses and created a useless regulatory body, was misguided from the beginning and continues to cause harm for Californians. The law has been shown to have a very muted effect on the workers it purports to help because, while raising wages, it has led to reduced hours, job losses and automation.
A new study delivers more bad news for Gov. Gavin Newsom’s signature labor policy by finding that it also increased prices not only at fast food restaurants but in other restaurants competing for the same workers.
According to economic researchers in a study published by the National Bureau of Economic Research, the 2023 law that raised the industry’s minimum wage resulted in higher prices in affected fast food restaurants and other restaurants by as much as 3.6%. This is in addition to the general inflation Americans have faced during that time.
“A large, sector-specific minimum wage increase raised labor costs substantially, firms passed those costs through to consumers in the form of higher prices, and the resulting decline in demand contributed to reductions in employment,” wrote researchers from UC San Diego and Texas A&M.
The law, negotiated in darkness through the use of non-disclosure agreements, pushed the minimum wage for fast food workers up to $20 an hour, a 25% increase from the year prior, which was one of the largest one-time increase increases in U.S. history.
For small business owners, many of whom were affected by this law, this is a tremendous increase in labor costs. When costs rise, businesses are left with few options: raise rates, make offsetting cuts or eat into profit margins — and California’s fast food businesses have turned to all three.
A recent study from researchers at UC Santa Cruz found that hours for workers were cut significantly, which also led to fewer people qualifying for benefits. The same study reported an increase in automation. Earlier studies found that, between January 2024, when restaurant operators began bracing for the law to take effect, and December 2025, the sector lost approximately 26,000 jobs.
Industry trends were supposed to be monitored by the Fast Food Council created by the law, but the group has not met in more than a year and does not even list a chairperson in its literature. The premise of the council is absurd (it’s a way for unions to regulate a largely non-union industry), and only slightly more absurd than the fact that the council can’t even hold meetings.
California has one of the highest teen unemployment rates in the nation, and the minimum wage increase only makes it harder. Fast food jobs used to be entry level, but higher minimum wages make it less likely for employers to take a chance on inexperienced workers.
Also, the UC Santa Cruz study reported a dramatic spike in job applications after the law was passed, meaning the competition for these jobs is significantly tougher. This also reduces mobility, which was previously how workers upskilled and got raises.
The worst part of this law is that it hurts the very people it’s designed to help. Beyond the negative effects the law has had on workers, the cost increases actually hurt low-income families the most as they are the ones who can least afford the increase in food prices.
There’s a reason then-Gov. Jerry Brown said a decade ago that “Economically, minimum wages may not make sense.” It’s because it really doesn’t make sense when you consider everything that comes with it: higher prices, reduced hours and job losses. Brown said this while increasing the minimum wage.
To be fair to Brown, he added that it made sense “politically,” which is probably true for Democratic politicians courting labor support. But for everyone else, it makes little sense.
What does make sense is promoting an environment where businesses have the flexibility to keep costs low and prices down and pay workers based on merit. California lawmakers should consider pursuing these policy outcomes instead of making secret deals to appease special interests.
Matt Fleming is an opinion writer living in Placer County. You can follow him on X @Flemingwords or connect via email: flemingwords@gmail.com.
This story was originally published April 16, 2026 at 5:00 AM with the headline "In every way, California’s minimum wage hike for fast food workers is failing | Opinion."