Recent reports released by the University of California-Berkeley’s Institute for Research on Labor and Education (IRLE) and The Shift Project, a Berkeley IRLE-funded outfit run by Harvard Kennedy School’s Daniel Schneider and UC-San Francisco’s Kristen Harknett, claim California’s new $20 minimum wage for fast food restaurants has not hurt restaurant operators, employees, or consumers.
Not only do these claims run counter to reports dating back to fall 2023 after the wage law was signed by Governor Gavin Newsom, but federal data and other reports show otherwise. California’s fast food industry employment is down since the beginning of the year, menu prices in California have spiked by roughly double the amount Berkeley researchers estimate, and a supermajority of operators say further staffing and pricing adjustments may be required to continue to adjust in the next year.
Since California Governor Gavin Newsom signed AB 1228 into law in September 2023, the state’s fast food restaurant industry has been in crisis. The AB 1228 legislation required all fast food restaurants with 60 or more locations nationwide to pay all employees a minimum wage of $20 per hour. The law created a 25 percent increase in labor costs in just a matter of months– jumping past the state’s highest-in-the-nation $16 minimum wage for all employees, regardless of industry.
Beginning in late 2023, restaurant operators and brands began to raise concerns and announce new strategies to mitigate negative impacts of the law. As early as November 2023, operators announced layoffs, menu price hikes, and reliance on automation as ways to stay in operation under the new law.
Governor Newsom has claimed these concerns never materialized and there have been no negative impacts on the state’s fast food industry. Federal employment data shows otherwise. Now, researchers from a taxpayer-funded labor center at the University of California-Berkeley say they can corroborate the Governor’s claims.
This policy brief explores how the recent UC-Berkeley and another affiliated analysis provides a flawed view of California’s fast food industry. These “studies” rely on convoluted data sources to make their claims and forgo widely accepted data practices to measure impacts of laws like the $20 minimum wage hike.
