CA Fast-Food Sector Sees Major Job Losses, Revised Data Shows

CALIFORNIA — The health of California's labor market faced a major adjustment last week as the U.S. Bureau of Labor Statistics revised its employment data for 2024, prompting a new round of debate about the impact of the $20-per-hour minimum wage on the fast food industry.

The debate comes as the California Fast Food Council mulls another potential raise for fast food workers in the Golden State. Opponents of the raise hold the new numbers up as proof that raise increases are driving up prices while causing mass job losses.

In October, six months into the wage hike, initial findings showed no job cuts. In the mid-March revision, however, federal data revealed a 3 percent loss in statewide numbers for the limited-service restaurant sector, commonly known as fast food.

The 3 percent loss equates to some 16,000 lost jobs, according to an industry publication.

This purported shift in analysis "challenged prior assumptions about the industry’s resilience in the wake of last year’s implementation of the FAST Recovery Act and has sweeping implications for economic analysis, workforce policy and projections for 2025," according to a statement from Beacon Economics and the California Alliance of Family-Owned Businesses.

A January report showed California’s fast-food restaurants increased their menu prices by 14.5 percent between September 2023 and October 2024, while the national average was 8.2 percent, Nation's Restaurant News reported.

"Anyone calling California’s minimum wage increase at fast food restaurants last year a big success, was very premature in forming their opinions," said Christopher Thornberg, Founding Partner of Beacon Economics. "The impact of minimum wage hikes take time to show up in the data. The revision is now in, and predictably, they show the FAST (Recovery) Act's effects plain as day—it has led to job losses in the limited-service restaurant industry."

Before the revised numbers were known, a survey of nearly 200 fast-food restaurant owners found that 98 percent raised prices to deal with the wage hike that took effect almost one year ago.

One fast-food chain, Dave's Hot Chicken, dealt with the wage increase by doing away with the human dishwasher position and instead using automated dishwashing equipment, a report revealed.

"This revised data is evidence that singling out the fast-food industry alone for this 25% overnight wage increase has hurt our industry and killed jobs we otherwise could have created," said Sean Piazza, president of the California Alliance of Family-Owned Businesses.

'Questionable Methods' Used For Revised Jobs Data, Researchers Say

However, an economist from the University of California, Berkeley, identified “questionable methods” in the industry report claiming the wage hike led to “substantial negative employment effects and large price increases.”

“That report cherry-picks its numbers and does not use modern causal identification methods, casting doubt on its claims,” wrote Michael Reich, UC Berkeley professor and chair of the Center on Wage and Employment Dynamics.

The policy brief from UC Berkeley’s Institute for Research and Labor and Employment also found that an estimated wage increase of 8 to 9 percent for workers covered by the policy had no spillovers to non-covered workers, no negative effects on fast-food employment, and price increases of only about 1.5 percent— or about 6 cents on a four-dollar hamburger.

Further, the researchers found that since the wage hike took effect, the number of fast-food establishments grew faster in California than in the rest of the country.

Another Wage Increase Sought For Fast-Food Workers

The newly created California Fast Food Council may seek another wage increase after a flood of workers across the state attended the group's meetings and called in to raise concerns about wage theft, employers cutting hours and the cost of living in the Golden State, Reuters reported.

During a Feb. 26 meeting, fast-food worker Veronica Gonzales told the council through a translator that her rent went up as did the cost of her medicine.

"I cannot live with this wage," she said remotely from a room full of workers in San Jose.

The increase would make up for the cost of living and would be around 3.5 percent, giving workers another 70 or so cents per hour to pay their rent and bills and care for their families.

Reuters reported that when the council holds meetings this spring, it plans to discuss the increase further but not vote on it.

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