There is a mountain of evidence pointing to disastrous consequences from California’s $20 fast-food minimum wage law. Since it went into effect in 2024, prices are up, businesses are struggling, and federal employment data shows that fast-food jobs are disappearing. The damage was so apparent, California voters rejected a statewide minimum wage hike ballot measure later the same year.
Despite the growing evidence of harm, occasionally a study claims the law has had little to no impact on employment, even as Californians continue to see its harmful effects.
UC San Diego economist Jeffrey Clemens and fellow Texas A&M University economists argue that conflicting findings on California’s fast-food minimum wage stem from researchers’ choices in how they measure its impact. In all economic studies, researchers make choices on what data to use and how to best show the impacts of policies or events. Yet certain choices, whether made intentionally or not, can lead to misleading results.
In their latest report, Clemens and his coauthors outline 1,440 combinations of different study design choices, including data sources, comparisons to other states, how to measure changes in employment, time windows including or excluding COVID-related employment changes, and adjusting for non-minimum wage related trends.
Despite the wide range of choices available to researchers, more than 96% of the approaches examined found negative employment effects from California’s $20 fast-food minimum wage.
This suggests that studies finding little to no employment impact, such as recent research by UMass Amherst economist Arin Dube, are outliers. In fact, Clemens notes Dube’s own preferred employment impact estimates are “at the extremes” of all of the research designs they ran.
They outline a few reasons why this may be, which include:
- Dube’s recent report creates an unrealistic baseline for what California’s fast-food employment would have looked like without the wage hike, heavily based on states like Idaho and Utah that experienced very different overall employment trends than California. As a result, this baseline used to measure the wage hike’s impact may not accurately reflect what would have happened in California even without the $20 fast food wage.
- The Dube report modified standard statistical procedures, like omitting a key adjustment used by other researchers designed to make employment comparisons more reliable.
- Dube chose to place greater weight on employment data closer to the pandemic and the immediate recovery period, where fast-food employment experienced “unusual” growth as states recovered from the pandemic.
Dube has a long history of publishing controversial research finding minimal job impacts from minimum wage hikes and has frequently collaborated with fellow pro-wage hike economists such as UC Berkeley’s Michael Reich. He also advised the United Kingdom on substantial minimum wage increases, which have since faced scrutiny amid unprecedented youth unemployment in the country.
While some economists may choose approaches that downplay the consequences of California’s $20 fast-food minimum wage, the overwhelming majority of possible choices examined in this study point to job losses. The next time a study claims the law has had no real impacts, it’s worth taking a closer look at how researchers arrived at that conclusion.