Contrary to the governor’s spin, reliable data clearly show that California is suffering as a result of its new $20-minimum-wage law.
Contrary to the governor’s spin, reliable data clearly show that California is suffering as a result of its new $20-minimum-wage law.
J ust days ahead of another monthly jobs report from the Bureau of Labor Statistics (BLS), California governor Gavin Newsom took to the spin room again to tout the success of his $20-minimum-wage law for fast-food restaurants. The latest BLS data drop shows that Newsom’s spin is resoundingly inaccurate.
Once the fast-food-wage law was signed, in September 2023, California’s restaurants were plunged into chaos. By January 2024, restaurants were vocal about their concerns: warning of closures, reductions in employee hours, and job cuts. Those fears became reality in April, when the law took effect.
The governor’s office had previously stated that those looking into California jobs data should use seasonally adjusted figures — since economists agree that such figures provide the most accurate picture of the economic situation. Now, he’s ignoring his own advice and using non-adjusted data because they are more politically palatable. Most recently, he claimed — using unrevised data, perhaps to save face — that the industry has added 11,000 jobs.
A few days later, August data revealed that California is down a net 5,400 fast-food jobs this year, accounting for seasonal variations such as summer and winter holiday hiring and subsequent dips. Even if one used the governor’s preferred data set, one would find that California had a jobs decline over the past month.
The annual growth rate in the state’s fast-food industry has stagnated since the implementation of this law. This August, year-over-year growth was roughly two-tenths of a percentage point. Compare that with 2023 — before the fast-food-wage law was signed — when year-over-year jobs growth for any given month was as high as five percentage points.
If that isn’t enough to convince the governor, he should take it from restaurants’ books. Yet another BLS data set, the quarterly Census of Employment and Wages, tracks employer-reported jobs and wages based on federally mandated unemployment filings. These data cover most employers rather than the sample that is represented in the monthly jobs releases, and they provide an even more accurate economic picture.
The latest available numbers, from September 2023 to March 2024, confirm that California’s fast-food restaurants have shed thousands of jobs since the signing of the law and confirm what restaurant owners and their employees have been saying for months: The $20-minimum-wage law has hurt California.
What’s more concerning is how this has affected workers’ earnings. A preliminary look at total quarterly earnings shows that employees have lost roughly $37 million between September 2023 and March 2024, compared with positive quarterly-earnings-growth rates over similar periods pre-pandemic.
The situation is likely only to worsen. According to a recent survey of nearly 200 California fast-food operators that employ tens of thousands of workers in the state, 93 percent of operators said they would have to raise menu prices even higher in 2025, and 87 percent said they would need to continue to reduce staff or consolidate positions next year. And that’s without taking into account a potential additional 3.5 percent wage hike that has been presented to the state’s Fast Food Council with ardent union support. This is hardly a modest impact for Newsom’s “modest” law.
Newsom’s signature slogan, “What’s good for workers is good for business,” is a false promise. When workers see a reduction in shifts or have their jobs eliminated as a result of new laws, their earnings suffer. Combine that with rising menu prices as restaurants across the state adapt to stay in business, and it’s obvious that fast-food employees are the ones who suffer. The bulk of available data, especially those widely used by economists, clearly show that California is suffering as a result of the $20-minimum-wage law.
Until Newsom recognizes this, his efforts to trick the public into accepting flawed policies will continue to ring hollow.
Mike Saltsman is the executive director of the Employment Policies Institute, where Rebekah Paxton is the research director.