Golden State Today

A study by UC Berkeley’s Institute for Research and Labor Employment has found that California's $20 minimum wage for fast-food workers has led to significant benefits without the adverse effects predicted by critics. The study highlights that wages have increased significantly, yet there has been no reduction in employment within the fast-food sector.

Key findings from the research indicate an 18% increase in wages for 90% of non-managerial workers, marking a substantial improvement for those who have historically been underpaid. Additionally, the wage hike did not lead to job cuts, despite earlier predictions of negative impacts on employment.

The report also notes that profit margins in the industry were already high due to "monopsonistic (higher than competitive) profit margins," which absorbed much of the cost increase. Menu prices rose by only 3.7%, equivalent to about 15 cents on a typical $4 hamburger.

Governor Gavin Newsom commented, “This study reaffirms that our commitment to fair wages for fast-food workers is not only lifting up working families but also strengthening our economy. The data shows that investing in workers benefits everyone — workers, businesses, and our state as a whole.”

Since the law took effect in April 2024, California set a record for fast food jobs with an addition of 7,400 positions by July. This development counters claims made by corporate restaurant industry groups about massive job losses due to wage increases.

The study employed novel data collection methods from over 11,000 reported salaries on Glassdoor and price information from more than 1,500 California restaurants compared with similar establishments in states without recent wage hikes. This approach helped isolate the effects of the policy change from broader market trends.

Co-author Michael Reich stated, “We find that a carefully implemented sectoral wage floor can raise worker pay without reducing the number of jobs or substantial consumer cost burdens.” The findings align with recent research challenging outdated assumptions about wage increases leading to job loss.

California’s experiment with sectoral wage policy is notable and could serve as a model for other states if deemed successful. A second policy targeting healthcare workers is already underway.

To further discuss these findings and implications, the authors will host a virtual press briefing tomorrow. More details are available in their full report.