Newsom’s $20/Hr. Fast-Food Minimum Wage Law Backfires
Two years after California Governor Gavin Newsom signed the so-called FAST Recovery Act with union bosses at his side, the law is leaving behind what critics call a trail of broken promises: layoffs, restaurant closures, reduced hours, and higher prices for working families.
The measure, which went into effect in 2023, forced a $20 minimum wage on the state’s fast-food industry. At the signing ceremony, Newsom touted it as a “win-win-win” for workers, businesses, and consumers. Today, the results suggest otherwise.
According to the Employment Policies Institute (EPI), nearly 20,000 fast-food jobs have disappeared in California since the law was signed—almost one-quarter of all fast-food job losses nationwide during that period. Bureau of Labor Statistics data confirm the grim trend in what has long been one of the state’s largest entry-level job markets.
The ripple effects have been swift and severe. Two major Pizza Hut franchisees laid off more than 1,200 delivery drivers, citing labor costs. Other chains, including Mod Pizza and Foster’s Freeze, closed California locations altogether. Franchise owners, already squeezed by inflation and tight margins, say the wage hike made survival impossible.
Even for those who kept their jobs, hours were cut dramatically. EPI estimates non-tipped restaurant workers lost an average of 250 hours annually—roughly $4,000 in lost wages compared to the state’s previous minimum wage. Many part-timers are being replaced by kiosks and self-ordering machines as restaurants race to control costs.
“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,” said EPI research director Rebekah Paxton. “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.”
Customers aren’t faring better. Data from Datassential show California fast-food menu prices spiked more than 13% after April 2024—nearly double the national average. Families already struggling under Biden-era inflation now face higher costs just to feed their kids.
Small businesses are suffering most of all. The American Cornerstone Institute warned that unlike large corporations, mom-and-pop operators cannot absorb soaring payroll costs. “A statewide minimum wage doesn’t make sense when applied uniformly across a state as big as California,” the group said, noting that San Francisco’s economy looks nothing like the Central Valley’s.
Critics say Newsom ignored these economic realities for the sake of a political victory with organized labor. “This should be a wake-up call for Newsom and other policymakers pushing for drastic wage hikes that will cause unintended consequences,” Paxton warned.
Supporters point to a UC-Berkeley study claiming minimal job impact and only a modest 2% increase in prices. But business groups and workers say that study papers over real-world layoffs, reduced hours, and shuttered restaurants.
Newsom himself has remained silent on the most recent data, a fact many interpret as acknowledgment that the law is failing. “His office isn’t responding because the numbers speak for themselves,” one franchisee said.
The political stakes are high. Newsom is often floated as a potential Democratic presidential contender, but the FAST Recovery Act—once touted as a model for the nation—is now seen as a case study in progressive overreach.
“California was the test case, and it failed,” one Republican strategist said. “If Democrats try to scale this nationwide, the result will be disaster for workers and consumers alike.”
For now, the legacy of Newsom’s wage law is clear: tens of thousands of jobs lost, hours slashed, restaurants closed, and prices rising faster than anywhere else in America. What was supposed to be a bold experiment has turned into yet another self-inflicted wound from California’s radical leadership.