California's fast food industry adapts to new wage laws impacting jobs and prices.
A year after implementing Assembly Bill 1228, California’s fast food minimum wage has reached $20/hour. This major change has led to over 22,000 job losses and a staggering 14.5% rise in fast food prices. The law, initially aimed to boost wages, faces both praise and criticism, with many restaurants adjusting by reducing hours or planning to cut staff further. Concerns about the impact on local businesses, particularly Latino-owned restaurants, also arise. As the debate continues, industry leaders push for reconsideration of wage hikes amidst an evolving fast food landscape.
In sunny California, a significant change took place a year ago with the introduction of Assembly Bill 1228, which raised the fast food minimum wage to a hefty $20 an hour. Now, one year later, we’re taking a closer look at how this ambitious law has shaped the fast food industry amidst a swirl of job losses and price increases.
Since the law took effect, approximately 22,717 fast food jobs have disappeared, based on seasonal adjustments. This is alarming news for anyone relying on these jobs for income. The concerns over stability in the fast food sector don’t stop there. Most operators seem to be preparing for more cuts, with a staggering 89% of restaurants reducing employee hours to cope with rising costs. Even more daunting, 87% of these businesses have plans to cut further in the upcoming months.
Alongside job concerns, the prices at fast food chains in California have also taken a hit—though not the kind anyone hopes for. Fast food prices here have skyrocketed by 14.5% since AB 1228 was enacted. This increase far surpasses the 8.2% average increase seen nationally, making Californians feel the pinch at the register.
AB 1228, spearheaded by then-Assemblyman Chris Holden, was a hot topic in 2023 and drew both praise and criticism. Initially proposed to set the wage at $22 an hour, this figure was eventually negotiated down to $20, barely squeezing through the state’s legislative chambers. Anticipating the cost hikes, many companies made job cuts even before the law took effect—one notable example being the layoff of 1,200 drivers at Pizza Hut.
As concerns over job losses grew more prominent, some fast food restaurants were granted exemptions in high-traffic areas like airports and stadiums, aiming for a balance between wages and employment levels.
As of June 2024, over 10,000 fast food jobs had reportedly been lost, raising eyebrows and consternation among industry insiders and employees alike. The Governor’s office disputed these job loss figures, claiming growth instead. Polarizing measures like these had a direct impact on voters, who ultimately rejected Proposition 32, which sought to elevate the statewide minimum wage to $18.
Fast forward to 2025, and predictions suggest that the total job losses in thefast food sector could reach 16,000 and possibly continue to climb. Many traditional fast food roles have been replaced by third-party services like DoorDash and Uber Eats, changing the landscape of fast food employment.
Faced with the pressure of increased wages, fast food restaurants are left with a few choices: raise prices, reduce employee hours or staff, or even shut down entirely. With 87% of fast food operators expecting further staffing cuts, the rate of job losses could further escalate.
Industry voices are expressing serious concern, especially for Latino-owned establishments. Leaders in the restaurant community have highlighted how the wage increase puts an unfair burden on them. In fact, over 1,000 local restaurant owners have appealed to the Fast Food Council and the Governor, urging a reconsideration of the wage hikes due to the economic hurdles they have brought.
Despite contradicting views about the wage law’s effectiveness, a study from the UC Berkeley Center on Wage and Employment Dynamics argues that the law hasn’t significantly reduced employment nor spurred monumental price increases. As the California Fast Food Council prepares to consider a wage increase to $20.70 later this year, one thing is certain: the conversation about fast food wages will continue, and everyone is keenly aware of the impacts on jobs and prices.
As we look back on a year of challenges and changes, the fast food landscape in California reminds us that balancing fair wages with job opportunities and economic stability is no easy feat.
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