NBER Analysis on California's Minimum Wage Increase
- California raised the minimum wage for fast-food workers to $20 per hour.
- This policy led to a loss of about 18,000 jobs in the fast-food sector since April 2024.
- The job reduction represents a 3. 2% decline in comparison to similar sectors in the U. S.
- Researchers Jeffrey Clemens, Olivia Edwards, and Jonathan Meer provided these estimates in a new report.
- The report is available on the NBER website.
Assembly Bill 1228
- Approved in September 2023 and signed by Governor Gavin Newsom.
- Established a Fast Food Council to set and adjust wages for the industry.
- Increased the minimum wage from $16 to $20 starting April 1, 2024.
- Future annual adjustments to the wage will begin in 2025.
Impact on Employment
- The study showed a notable decline in fast-food employment in California.
- Job reductions estimated between 2. 3% and 3. 9%.
- National fast-food employment slightly grew by 0. 10% during the same time.
- California's other economic sectors remained consistent with broader U. S. trends.
- Before the law, California's fast-food job market was similar to the rest of the country.
Criticism of Wage Increase
- Economic expert Rachel Greszler called wage controls ineffective.
- She highlighted outcomes in the fast-food sector as a warning, particularly for similar wage increases in Los Angeles for hotel and airport workers.
- The Wall Street Journal criticized the belief that wage hikes improve the economy as unrealistic thinking.
- They also criticized politicians supporting similar wage increases in New York City.
Response from Governor Newsom's Office
- Tara Gallegos, deputy director of communications, challenged the study's findings.
- She claimed the research was connected to the Hoover Institution, which has provided misleading information about California’s wage policies.
- Gallegos cited a counter-argument from a San Francisco Chronicle article.
- She referenced a UC Berkeley study from February 2025 that suggested the wage increase's impacts were not as adverse as predicted and emphasized worker benefits.
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