Tag: minimum wage

California’s $20 fast food wage yields higher prices, fewer jobs, more automation

Two years ago, a hotly contested law imposing a $20-per-hour minimum wage on franchised fast food outlets took effect.

The legislation, Assembly Bill 1228, emerged from months of intense political conflict, pitting fast food behemoths such as McDonalds against service worker unions, arguing not only over the wage itself but what the industry saw as an effort to undercut its business model.

Eventually the industry agreed to a higher wage in exchange for unions leaving the franchise system unmolested and the creation of a commission to oversee wages and working conditions.

Ever since, fast food corporations and labor interests have jousted over the law’s impact, with both waving economic reports to bolster their positions.

The industry warned that the FAST Act, as it was dubbed, would push fast food prices upward and employment opportunities downward. Unions and their allies contended it would benefit fast food workers with few, if any, negative impacts.

The situation cried out for independent evaluation, not only to settle the arguments but to provide guidance on the consequences of political intervention on wages in any industry.

Thankfully, we may have that study.

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Seattle’s Minimum Wage Laws Backfired on Uber and Lyft. Now the Union Wants To Limit Drivers.

In recent years, progressive locales like Seattle have experimented with minimum wage laws for rideshare and food delivery drivers. These laws have led to surging prices for rides and delivery, reduced demand for trips and orders, and no evidence of higher take-home pay for drivers.

As demand for trips has plummeted in the wake of the wage hikes, more rideshare drivers are finding themselves working longer hours to achieve the same number of rides as before. Instead of fixing the root of the problem, a union representing Seattle rideshare workers has a new solution: Limit the number of people who can work as Uber drivers.

According to the Drivers Union, which represents Lyft and Uber drivers in Washington State, there is a severe glut of rideshare drivers on the road in the Emerald City. The union bases this on a new report it released (with funding from the state Department of Ecology), which concludes that “a majority of miles driven by Uber drivers are now without a passenger.”

The report’s topline findings include an increase in “deadheading” and “empty miles” in which rideshare drivers are driving without a passenger on board, as well as an increase in the number of drivers that is purportedly “7 times faster than trip growth.” In addition to lower driver pay, the report concludes that “deadhead” miles are also causing more air pollution and congestion in the city.

The union’s recommendations are to call for “a pause in onboarding new drivers until a reduction in unnecessary deadheading miles is achieved,” as well as suggesting “rules to maintain a balanced market where increases to driver supply don’t continue outpacing trip growth.”

While the report is dressed up in the language of “deadheading” and climate change, it’s little more than a thinly-veiled attempt to do what unions so often do: Limit the labor supply to lock out non-union members. The Drivers Union also conveniently ignores the reason behind the increase in “empty miles,” which is the result of Seattle’s aggressive pursuit of minimum wage laws for gig work.

In 2020, Seattle became the second city in America to pass a minimum wage law for rideshare drivers. It expanded the law to cover gig-based food delivery platforms like UberEats and DoorDash in 2024. While driver pay was supposed to rise, the primary effect of these laws was a dramatic drop in the number of rideshare and delivery order requests.

After the rideshare minimum wage law, rider fares increased by an average of 40 percent, with some trips climbing by up to 50-60 percent. According to a recent analysis by NetCredit, Seattle is now the most expensive city in America to hail an Uber ride, with a 30-minute ride costing an average of $60. (By way of comparison, Washington, D.C., which lacks a minimum wage law for rideshare drivers, averages just over $33 for a 30-minute trip).

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As NYC Considers a $30 Minimum Wage, Business Owners Are Warning About the Consequences

New York City stands to make a decision about its minimum wage that can only hinder growth, create layoffs, and result in price hikes.

City Council recently introduced a bill to set the minimum wage at $30 per hour. Democratic City Councilwoman Sandy Nurse put the “$30 for Our City” legislation forward, WPIX reported on Tuesday.

The outlet laid out the wage hike scheme from the bill.

Businesses and franchises that employ more than 500 people must pay $20 an hour in 2027, $23 in 2028, $26 in 2029, and $30 by 2030.

Small employers have a different road map, with a $19 minimum in 2027, $21.50 in 2028, $24 in 2029, $27 in 2030, and $29 in 2031.

The increase would include a cost-of-living adjustment and yearly hikes that account for inflation.

According to The Wall Street Journal, Melissa Fleischut, president of the New York State Restaurant Association, anticipating one of the consequences of this potential change, said that “we feel like we’re at a tipping point with consumers” with respect to price increases that would offset higher wages.

“There’s only so much you can charge for a slice of pizza or a cheeseburger,” she added.

The Wall Street Journal also reported comments by Moe Chan, who has a coffee and tea company in Queens: “As much as I would like to pay $30, we don’t have money.”

According to the New York state government website, the minimum wage for the city is set at $17, seeing a $0.50 increase at the beginning of 2026.

Although The Wall Street Journal said food delivery drivers who make $21.44 under other regulations are not impacted, 1.68 million workers stand to see an increase. The outlet said Democratic Mayor Zohran Mamdani — unsurprisingly — supported the $30 wage during his campaign.

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California’s Fast-Food Minimum Wage Hike Is Killing Jobs

In 2023, California adopted a law that raised the minimum wage to $20 per hour. It also created a Fast Food Council with the power to further increase wages by dictate every year. Twenty bucks an hour is a nice, round number which is probably why state lawmakers picked it—though it’s not clear why they stopped there. After all, if you’re going to create prosperity by command, why not shoot for the moon and make all the Golden State’s fry cooks millionaires? But it’s just as well that they didn’t go further—that hike to $20 per hour is killing jobs as it is.

One Law Kills 18,000 Jobs

“On April 1, 2024, California raised its minimum wage from $16 to $20 per hour for fast-food workers employed at chains with more than 60 locations nationwide,” Jeffrey Clemens, Olivia Edwards, and Jonathan Meer write in a National Bureau of Economic Research working paper that was first addressed by Reason‘s Peter Suderman in the November print issue. “Our median estimate suggests that California lost about 18,000 jobs that could have been retained if AB 1228 had not been passed.”

The authors initially calculate that “employment in California’s fast-food sector declined by 2.7 percent between September 2023 and September 2024 relative to fast-food employment elsewhere in the United States.” But they make the point that, prior to the passage of A.B. 1228, the bill hiking the minimum wage, fast-food employment was rising faster in the state than elsewhere in the country. Allowing for that, and for changes in the overall labor market, they estimated the real decline in California’s fast-food employment at 3.6 percent to arrive at 18,000 lost jobs.

That’s a lot of missing opportunities for Californians to get a foothold in the work world, make money, and pay their bills. It also squares with other estimates of the attempt to legislate prosperity.

In September, the Employment Policies Institute (EPI) drew on U.S. Bureau of Labor Statistics data to estimate “15,988 fast food jobs lost since the law went into effect in April 2024.” The group added, “California’s fast food job loss rate (-3.3% of jobs lost) more than doubled the losses in fast food restaurants nationally (-1.6% of jobs lost) since September 2023.”

That EPI memo built on a November 2024 study that found “more than 4,400 California fast food jobs have been lost since January,” based on federal data. That study also found “10.1 percent menu price increases by April 2024 since the law’s passage in 2023.”

A February 2025 paper from the Berkeley Research Group (BRG) found the fast-food sector “lost 10,700 jobs (-1.9%) between June 2023 and June 2024.” The researchers added, “this decline sharply contrasts with the sector’s historically compounded annual growth rate of 2.5% and marks the only December year-over-year decline in fast food employment this century–excluding the Great Recession (2009) and the COVID-19 pandemic (2020).” That report also found that “menu prices at California’s fast food restaurants increased by 14.5% between September 2023 (the month AB 1228 was signed into law) and October 2024, nearly double the national average (8.2%).”

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New York Doubles Down on Delivery Wage Disaster

In 2023, New York City became the first city in America to pass a minimum wage rate for app-based restaurant delivery drivers. Several other progressive cities have followed suit, resulting in a range of issues from rising delivery costs to many drivers dropping out of the workforce entirely. Now, the city that started it all is doubling down—this time on grocery delivery drivers.

In July, the New York City Council passed numerous bills that it claimed were designed to protect grocery delivery drivers. This legislative package introduced new rules, requiring delivery apps to include a 10-percent tipping option either before or at the time of the order (vs. afterwards, where the option exists now), and mandated that app-based platforms pay delivery drivers within seven days of the end of a pay period.

One of the most notable bills would extend New York City’s minimum wage mandate from restaurant delivery drivers to drivers delivering groceries. The rate, first set at $19.96 per hour in 2023, has risen to $21.44 per hour. Though current Mayor Eric Adams eagerly endorsed the original law (saying at the time, “Our delivery workers have consistently delivered for us—now, we are delivering for them”), he surprisingly vetoed the new expansion. “Now is not the time to do anything that will further increase the cost for New Yorkers of obtaining groceries, when prices are already too high,” Adams said in his veto statement.

Despite mayoral resistance, the City Council has decided to plow forward anyway by overriding Adams’ veto.

New York’s experiment with delivery driver wage mandates hasn’t gone well. Pay went up after the 2023 rule kicked in, but so did prices—and many drivers left the market altogether. The city saw an 8 percent drop in its delivery workforce, while food delivery costs rose 10 percent, including a 12 percent jump in restaurant prices and a staggering 58 percent spike in app fees. Tips, meanwhile, plunged 47 percent. Platforms even started capping drivers—at one point, Uber Eats reported more than 27,000 New Yorkers were on their driver waitlist.

Seattle followed suit in 2024 with a $26-an-hour minimum wage for delivery drivers—and immediately watched the system collapse. Apps tacked on a new $5 delivery fee, and with taxes added, customers were soon paying bills with nearly 30 percent of the cost unrelated to the food itself. DoorDash saw 33,000 fewer orders in just the first two weeks, wiping out about $1 million in restaurant sales.

Counter to the law’s intention, many Seattle delivery drivers saw their earnings slashed by over half. “Demand was dead,” according to one such driver. A recent report from gig companies found that, following the ordinance taking effect, delivery orders dropped 25 percent, and driver pay fell 28 percent per hour logged on.

Even Seattle’s City Council president, who initially backed the mandate, later proposed cutting the topline rate to $19.97, in line with the state’s minimum wage. The partial repeal failed to pass.

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California’s Fast Food Minimum Wage Hike Cost the State 18,000 Jobs. That Shouldn’t Surprise Anyone.

In 2023, California passed a law requiring a $20 per hour minimum wage for all fast-food restaurants with more than 60 locations nationwide. Democratic Gov. Gavin Newsom portrayed the union-supported law as pro-worker, saying it moved the state “one step closer to fairer wages.”

Other California politicians supporting the law claimed it would provide a path to economic security for lower-income workers, enabling them to more assuredly put food on the table.

“Sacrifice, dedication, and the power of a government who serves its people is what got us to this moment,” said then-Assemblymember Chris Holden (D–Pasadena).

But the carve-out for smaller chains was an implicit acknowledgment that the law would come with costs—costs that smaller businesses with slimmer margins presumably could not afford. New research suggests that the mandate has also resulted in fewer jobs for struggling entry-level workers.

The law went into effect in April 2024 and increased the hourly pay of an estimated half a million workers across the state. But without the law in place, thousands more workers would likely have been employed.

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‘Big losses’: Study confirms Newsom’s $20-an-hour minimum wage decimated industry

Gavin Newsom, California’s far-left Democrat governor, is known to have presidential aspirations.

If he chooses that path, one of issues on which he will face a grilling will be economics.

And a new study has revealed it won’t look good.

It’s because since he imposed a $20-an-hour minimum wage for fast food workers in his state, California has lost close to 20,000 such jobs.

“That’s nearly 25% of the country’s fast-food job losses during that same period, according to an analysis of quarterly data released this month from the Bureau of Labor Statistics,” charged a report in the Washington Examiner.

“These grim statistics should be a wake-up call for Newsom and other policymakers pushing for drastic wage hikes that will cause unintended consequences,” said Rebekah Paxton, if the Employment Policies Institute.

The Examiner report noted Newsom “was all smiles two years ago when he signed the FAST Recovery Act, creating a $20 minimum wage for fast-food workers in his state. He called the legislation a win-win-win that would benefit restaurant owners, their employees, and customers alike.”

But it’s actually left behind “big losses.”

Besides job losses, there have been staff cuts, huge menu price increases and a turn to automation, the report said.

“California made national headlines when two large Pizza Hut franchises laid off more than 1,200 in-house delivery drivers to cut costs, while others, such as Mod Pizza and Foster’s Freeze, decided to close up shop entirely,” the report noted.

Paxton said, “Newsom’s $20 wage has turned out to be nothing more than a boost to his own ego at the expense of fast food workers. His consistent claim that the law is a ‘win’ is out of touch with reality, and lawmakers looking to mirror his job-crushing policies should think twice.”

Further, the analysis found even workers who kept working lost.

“The law has cost nontipped restaurant workers 250 hours of work annually, according to the EPI analysis, which represents $4,000 in lost income under the state’s previous minimum wage for fast-food workers.”

And, according to the American Cornerstone Institute, it’s hit small businesses hardest.

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Report: California’s $20 Fast Food Minimum Wage Led to 18,000 Fewer Jobs

California’s new $20-per-hour minimum wage for fast food workers has resulted in a significant decline in employment in that sector, leading to 18,000 fewer jobs than would have been the case otherwise.

That’s according to a new paper released by the National Bureau of Economic Research (NBER) this month, which said:

We analyze the effect of California’s $20 fast food minimum wage, which was enacted in September 2023 and went into effect in April 2024, on employment in the fast food sector. In unadjusted data from the Quarterly Census of Employment and Wages, we find that employment in California’s fast food sector declined by 2.7 percent relative to employment in the fast food sector elsewhere in the United States from September 2023 through September 2024. Adjusting for pre-AB 1228 trends increases this differential decline to 3.2 percent, while netting out the equivalent employment changes in non-minimum-wage-intensive industries further increases the decline. Our median estimate translates into a loss of 18,000 jobs in California’s fast food sector relative to the counterfactual.

HR Grapevine added:

The Employment Policies Institute estimated that “non-tipped restaurant workers [lost] 250 hours of work annually,” translating into up to $4,000 in lost income. That drop equates to seven weeks of work each year per employee.

The California Globe reported that “thousands of fast food jobs were shed by companies in anticipation for the higher costs,” including 1,200 drivers at Pizza Hut. Once the law took effect on April 1, 2024, “restaurants automated what they could to avoid the higher wages,” and “some fast food restaurants also closed.”

By June 2024, Stanford University data indicated “over 10,000 fast food jobs were already lost.” While the Governor’s office disputed the figure, saying fast food jobs had increased, it “stopped by the fall when it became apparent that federal data wasn’t on their side.”

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Los Angeles Votes for $30 Minimum Wage

Los Angeles lawmakers have advanced a measure that would make the city home to the nation’s highest minimum wage, approving a plan to raise hourly pay to $30 for tens of thousands of tourism workers by 2028, the year the city is set to host the Olympic Games.

The Los Angeles City Council voted 12-3 on Wednesday to approve the proposal, which applies to hotels with more than 60 rooms and businesses operating at Los Angeles International Airport.

Why It Matters

The tourism industry is one of the top five employers in Los Angeles County, supporting more than 540,000 Angelenos, according to the American Hotel and Lodging Association (AHLA).

However, there have been growing concerns about the sector, which has not fully rebounded from the COVID-19 pandemic. In 2023, Los Angeles only saw 79 percent of the number of international visitors it had in 2019, according to the AHLA. The association warned that “slower-than-anticipated pandemic recovery” coupled with other factors, including the wildfires, have massively impacted the tourism industry.

Industry groups argue that the wage plan will add pressure to businesses already struggling with staffing and a drop-off in tourism.

The measure would result in a 48 percent wage increase for hotel workers and a 56 percent rise for airport employees over the next three years.

The minimum wage for large hotel workers is currently two dollars higher than the standard minimum wage in the city, at over $18.

The wage increases would be brought in gradually, starting with $22.50 per hour in July 2025, increasing to $25 in 2026, $27.50 in 2027, and finally $30 in July 2028.

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Josh Hawley Wants To Raise the Minimum Wage

Sen. Josh Hawley (R–Mo.) has introduced a bill to increase the federal minimum wage, which has been $7.25 an hour since 2008. Hawley wants it to be $15 an hour. Many of us thought that the minimum wage issue was settled, but here we are again.

This is freshman-level economics: If you introduce a price floor on labor, the supply of people willing to work at that wage will exceed the demand, resulting in unemployment. If an employer can either have three employees making $10 an hour or two at $15 an hour (and one on public assistance), which do you think he would choose? Politicians like Hawley seem to think companies will simply accept lower profit margins. But they won’t—they’ll raise prices, cut staff, or go out of business.

Since hardly anyone earns $7.25 an hour these days, the federal minimum wage doesn’t cause serious economic distortion. A $15 mandate, by contrast, would wreak havoc, especially in low-cost-of-living areas. A simple thought experiment would be to imagine what would happen if we had a $10,000-an-hour minimum wage. This would obviously eliminate most jobs. The same principle applies to smaller hikes, even if the effects would not be as drastic. If prosperity could be legislated, we would have done it long ago.

Hawley is an interesting mix: socially conservative, economically populist. He has supported tax hikes on the rich, expanding the power of unions, capping credit card interest rates, expanding Social Security, imposing tariffs, and imposing prescription drug price controls. He’s frequently on the same side as such left-wing figures as Sens. Elizabeth Warren (D–Mass.) and Bernie Sanders (I–Vt.). In fact, he and Sanders, a self-described socialist, co-sponsored the bill to cap credit card interest rates.

What does it mean to be a Republican these days? What defines Republican economics? It used to be lower taxes or balanced budgets, but no longer. The Democrats are getting a lot of mileage out of being anti-tariffs, but that’s not because they are philosophically committed to free trade—most of them are reflexively opposing Trump. If a Democrat is elected in 2028, there’s a good chance they’ll maintain his tariffs. Voters don’t have many free market choices remaining.

We are a long way from 2005, when President George W. Bush and Treasury Secretary John Snow made an honest attempt at privatizing Social Security, or from 1998, when President Bill Clinton was pondering a bipartisan move along similar lines.

The camera loves Hawley; he’s handsome, articulate, and dangerous. When it comes to economics, there isn’t much daylight between him and the furthest-left factions of the Democratic Party. It is all about the packaging. If Hawley seems less crazy to the average voter than Warren and Bernie, that should worry us all.

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