$20-Per-Hour Minimum Wage Signed By Newsom Costing Calif. Jobs, Revenue

California Gov. Gavin Newsom once hailed the state’s $20-an-hour minimum wage for fast-food workers as a “win-win-win.” Two years later, the results are anything but.

The 2023 FAST Recovery Act, which Newsom touted as a landmark achievement, has coincided with sweeping layoffs, restaurant closures, and price hikes that are squeezing workers, small businesses, and families across the Golden State.

According to data from the Employment Policies Institute (EPI), California has lost nearly 20,000 fast-food jobs since the law took effect — roughly one-quarter of all fast-food job losses nationwide.

The consequences have been far-reaching:

• Layoffs: Two Pizza Hut franchise operators eliminated more than 1,200 delivery drivers, citing unsustainable labor costs. Other chains, including Mod Pizza and Foster’s Freeze, have shuttered California locations entirely.
• Lost Income: Workers who remain employed are working fewer hours. EPI estimates non-tipped employees have lost an average of 250 hours annually — translating into about $4,000 less in income despite the higher hourly wage.
• Automation: Self-service kiosks and other automated systems are rapidly replacing human workers as franchise owners struggle to survive under the mandate.
• Rising Prices: Research firm Datassential found that fast-food prices in California jumped more than 13% after April 2024 — nearly double the national average. Families already battered by inflation are now paying more for basic meals.

“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,” said Rebekah Paxton, research director at EPI.

Small business owners have been hit hardest. Unlike corporate giants with national reach, mom-and-pop restaurants and small franchisees lack the resources to absorb sharp labor cost increases. For many, the choice has been stark: cut staff or close doors.

The American Cornerstone Institute underscored that a one-size-fits-all wage mandate across a state as large and diverse as California was doomed to backfire. “In the same manner, a state-wide minimum wage doesn’t make sense when applied uniformly across a state as big as California,” the group argued.

Critics warn that Newsom ignored basic economic principles in favor of a headline-grabbing policy. “This should be a wake-up call for Newsom and other policymakers pushing for drastic wage hikes that will cause unintended consequences,” Paxton said.

Supporters of the law point to a University of California, Berkeley study claiming only modest price increases of around 2% and “no significant job losses.” But business groups call that research misleading, noting it does not account for the wave of closures, layoffs, and reduced hours now rippling through the state.

One franchisee owner summed it up bluntly: “His office isn’t responding because the numbers speak for themselves.”

Republicans argue the experiment should serve as a warning. “California was the test case, and it failed. If Democrats try to scale this nationwide, the result will be disaster for workers and consumers alike,” said one GOP strategist, according to Resist the Mainstream.

As Newsom eyes higher office, the political fallout could be severe. What he once called a “win-win-win” has quickly turned into a lose-lose-lose for businesses, workers, and families.

For everyday Californians, the costs are all too real: fewer jobs, reduced hours, higher prices, and shuttered restaurants — the very opposite of what Newsom promised.