Newsom’s $20/Hr. Fast-Food Minimum Wage Law Backfires
Two years after California Governor Gavin Newsom staged a high-profile signing ceremony with union officials to celebrate the FAST Recovery Act, the real-world outcome is looking far more destructive than triumphant. The law — which imposed a $20 minimum wage on fast-food restaurants starting in 2023 — has triggered a wave of job losses, reduced hours, restaurant closures, and higher consumer prices across the state.
Newsom originally claimed the wage mandate would be a “win-win-win” for workers, franchise owners, and customers. But new employment data shows the opposite has unfolded.
According to the Employment Policies Institute (EPI), nearly 20,000 fast-food jobs have vanished in California since the law was enacted — representing almost 25% of all fast-food job losses nationwide in the same timeframe. The figures, drawn from Bureau of Labor Statistics data, indicate severe damage to one of the state's primary entry-level job sectors.
The fallout is visible on the ground.
Two major Pizza Hut franchise operators have already laid off more than 1,200 delivery drivers, explicitly citing skyrocketing labor costs. Chains like Mod Pizza and Foster’s Freeze have permanently closed multiple California locations. For small franchise owners who rely on tight margins, the wage hike was not an inconvenience — it was fatal.
Even many workers who kept their jobs are worse off. EPI estimates non-tipped restaurant employees lost an average of 250 working hours per year, translating into roughly $4,000 in lost earnings even after the wage increase. Meanwhile, restaurant operators — desperate to limit payroll — have accelerated the shift toward ordering kiosks, automation, and smaller staff sizes.
“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.”
Consumers are being squeezed as well.
Menu pricing data from Datassential shows fast-food prices in California jumped more than 13% after April 2024 — nearly double the increase seen across the rest of the country. Families already strained by inflation now face higher costs just to purchase basic meals.
Small businesses are bearing the heaviest burden.
The American Cornerstone Institute noted that unlike corporate chains, local franchisees and mom-and-pop restaurants cannot absorb mandated payroll hikes, forcing them to choose between layoffs or closure.
“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 warned, emphasizing the stark contrast between the cost of living in San Francisco versus the Central Valley.
Despite mounting job losses, restaurant closures, and shrinking worker hours, the governor has been noticeably quiet. Critics say the silence speaks volumes.
“His office isn’t responding because the numbers speak for themselves,” one franchise owner told reporters.
Supporters of the law have leaned on a single UC–Berkeley study claiming the wage increase caused no employment decline and only modest price increases. But business groups and affected workers argue the study ignores layoffs, automation, reduced hours, and closures happening statewide.
Politically, the consequences may extend well beyond California. The FAST Act was touted by Democrats and labor unions as a national model — one that some hoped to replicate federally. Now, it is widely viewed as a case study in economic mismanagement.
“California was the test case, and it failed,” said a Republican strategist. “If Democrats try to scale this nationwide, the result will be disaster for workers and consumers alike.”
The results are now undeniable:
Jobs eliminated. Hours cut. Prices up. Businesses gone.
An experiment sold as progress has instead become a self-inflicted economic wound — especially for the very workers it was supposed to “help.”