Business
Column: The latest info on California's $20 minimum wage for fast food workers — higher pay, no job losses and minimal price hikes
Which of California’s economic initiatives droves conservatives batty the most? No question: It’s the state’s $20 minimum wage for fast food workers, which went into effect April 1.
For months before the wage increase, conservative pundits and economists filled the airwaves and newspaper columns with predictions that it would produce an employment bloodbath at fast food restaurants.
Some went further, purporting to find actual evidence of huge job losses. The Wall Street Journal claimed to have discovered losses of 10,000 jobs between September 2023 and January 2024, even before the new wage went into effect. The estimate was duly parroted by the conservative Hoover Institution.
What’s good for workers is good for business, and as California’s fast food industry continues booming every single month our workers are finally getting the pay they deserve.
— Gov. Gavin Newsom on the state’s $20 minimum wage for fast food workers
Two new analyses of the actual wage and price impacts of the $20-per-hour minimum have appeared this month. They employ slightly different statistics, but their conclusions are the same: There have been no job losses in fast food resulting from the increase. By some measures, employment has increased.
The first analysis to appear came from the Institute for Research on Labor and Employment at UC Berkeley. It found no measurable job losses, significant wage gains (as one might expect from raising the minimum wage to $20 from an average of less than $17), and modest price increases at the cash register averaging about 3.7% — far lower than the fast food franchise lobby claimed were necessary.
The second comes from a joint project of the Harvard Kennedy School and UC San Francisco. Not only did that survey find no job losses, but it also debunked claims or conjectures from minimum-wage critics that the increase would show up as reductions in hours or fringe benefits.
Nothing of the kind has surfaced in the months just before or just after the new law, according to the Harvard-UCSF survey’s authors, Daniel Schneider of Harvard and Kristen Harknett of UCSF.
“In response to wage increases,” they wrote, “employers could have looked to cut costs by reducing fringe benefits such as health or dental insurance, paid sick time, or retirement benefits. We find no evidence of reductions.”
These results are important for several reasons. One is that the fast-food minimum wage increase is one of the sharpest ever, and the resulting wage the highest in the country (with a few minor exceptions).
It’s also one of the most tightly targeted, applying to California stores of fast food chains with more than 60 nationwide locations. The sector employs about 750,000 workers in the state, 90% of whom were paid less than $20 an hour — on average, slightly less than $17 — before the new wage went into effect.
“This is a big deal because of how many workers are getting raises,” UC’s veteran labor expert Michael Reich, the lead author of the Berkeley study, told me. The estimated average 18% raise for affected workers means that some will be able to afford a better apartment or a used car. Employers get benefits too: “The minimum wage kills a lot of vacancies and improves the supply of labor coming to those restaurants.” That means less worker turnover, which is a bothersome expense.
The fast food raise has been presented as a signature achievement by California’s Democratic governor, Gavin Newsom, who depicts it as emblematic of the state’s progressive labor policies. “What’s good for workers is good for business, and as California’s fast food industry continues booming every single month our workers are finally getting the pay they deserve,” Newsom said in August.
Fast food employment in California rose after April’s minimum wage increase (solid red line), often faster than in the rest of the country.
(UC Berkeley)
California has been a leader in raising minimum wages. The overall state minimum wage this year is $16 an hour and is scheduled to rise to $16.50 on Jan. 1; that’s the highest state-level minimum and the highest except for the District of Columbia, where it’s $17.50. (Certain localities in some states have higher minimums.) The California minimum wage for certain healthcare workers will rise to between $18 and $23 on Wednesday.
The issue is also timely, for California voters will be asked on election day to vote on a minimum wage increase for employees at all but the smallest businesses to $17 immediately and $18 on Jan. 1.
All that has made the fast-food minimum a favorite target for employers, their lobbyists and some right-of-center economic commentators.
The minimum wage issue occupies a peculiar place in economic analysis. Many economists and commentators judge it by intuition — if you raise the price of something, such as the price of fast food labor, conventional economics say you’ll get less of it. Hence, higher minimum wage, fewer jobs.
But it’s also among the most heavily studied of all economic phenomena, with the overwhelming majority of studies finding little or no employment effect from a higher minimum. But none examined the effects of a minimum higher than $15.
That left the door open for critics of the California minimum to claim that this higher minimum was destined to wreak havoc on fast food employment. Some jumped the gun by finding job losses even before the law went into effect — ostensibly because employers were cutting jobs in anticipation of higher costs.
As I reported in June, the California Business and Industrial Alliance placed a full-page ad in USA Today, citing the Wall Street Journal’s figure of 10,000 fast-food jobs lost during the fall and early winter and describing 12 restaurants or chains as “victims of Newsom’s minimum wage.”
This was “baloney, sliced thick,” I wrote. Some of the chains listed were victims of other economic factors, such as competition, or financial manhandling by their private equity owners.
The figure of 10,000 job losses proved to be a statistical error: The Wall Street Journal used non-seasonally adjusted job figures, so it missed the fact that fast-food employment always falls in the September-January period, so the looming minimum wage played no role.
That was something of a curveball for UCLA economics professor Lee Ohanian, who had cited the Journal’s figure in two columns published by the Hoover Institution, where he is a senior fellow, writing that the pace and timing of the employment decline made it “tempting to conclude that many of those lost fast-food jobs resulted from the higher labor costs employers would need to pay” when the new law kicked in.
Ohanian told me in June that he hadn’t realized that the figures weren’t seasonally adjusted, and that he would query the Journal about the issue in anticipation of writing about it again. He told me more recently that he did write to the Journal but didn’t receive a reply, and that he hasn’t revisited the issue thus far.
So what do we know now about the $20 fast food minimum?
Government labor statistics haven’t shown an employment decrease in the fast-food category leading up to the April 1 date or in most of the months since then. The Berkeley researchers, led by Reich, found that fast-food employment rose almost steady this year from January through August, when it exceeded 750,000 for the first time.
According to the Bureau of Labor Statistics, employment in the sector during that period has run ahead of last year’s monthly figures in every month except June. From April 2023 through August this year, the BLS says, California fast food employment rose by about 3,200 jobs on a seasonally adjusted basis.
Reich’s team questioned reports of sizable price increases by restaurants aiming to pass their labor cost increases onto customers. The Wall Street Journal, for example, quoted one restaurant owner saying he had raised menu prices by 10%, and a McDonald’s franchisee fretting about losing his customer base if he had to raise the price of a Happy Meal to $20. This was nothing but a flight of fancy: The price of a Happy Meal in California ranges from $4 to $8 today, depending on its content and size.
Based on their examination of menus from nearly 1,600 California restaurants, the Berkeley researchers calculated the average price increase to be about 3.7% — “or about 15 cents on a $4 hamburger.” That was less than the 4.8% average increase imposed on fast-food customers from April 2023 to April 2024. Their math suggests that fast food restaurants passed about 62% of their labor cost increase in April to customers; the rest was taken out of profits.
None of this is likely to be the last word on the minimum wage issue. Future increases for fast food workers will be in the hands of an advisory wage council and subject to legislative oversight. It’s still early in the post-$20 era; wage and price effects may take many more months, even a year, to emerge, though over time the hourly minimums for other employment sectors may move higher, making the fast food wage less of an outlier.
Employment figures, moreover, can be hard to validate. Several different statistical models are in use by states and the federal government. UCLA’s Ohanian reminded me that the quarterly census of employment and wages of the Bureau of Labor Statistics, which covers about 95% of businesses, is current only through the end of March. The next release, covering the second quarter of 2024, won’t be published until December; it’s calibrated with the bureau’s other estimates only once a year.
Don’t expect anything published then to quash the debate over California’s fast food labor policy. The evil of the minimum wage is a favorite chew toy in conservative politics.
But the bottom line is that workers in the California fast-food industry are better off today than they were six months ago. Who has a problem with that?
Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.
In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”
“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”
Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.
In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.
The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.
“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.
Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.
The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.
Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.
Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.
A bill that would have required insurers to offer coverage to homeowners who take steps to reduce wildfire risk on their property died in the Legislature.
The Senate Insurance Committee on Monday voted down the measure, SB 1076, one of the most ambitious bills spurred by the devastating January 2025 wildfires.
The vote came despite fire victims and others rallying at the state Capitol in support of the measure, authored by state Sen. Sasha Renée Pérez (D-Pasadena), whose district includes the Eaton fire zone.
The Insurance Coverage for Fire-Safe Homes Act originally would have required insurers to offer and renew coverage for any home that meets wildfire-safety standards adopted by the insurance commissioner starting Jan. 1, 2028.
It also threatened insurers with a five-year ban from the sale of home or auto insurance if they did not comply, though it allowed for exceptions.
However, faced with strong opposition from the insurance industry, Pérez had agreed to amend the bill so it would have established community-wide pilot projects across the state to better understand the most effective way to limit property and insurance losses from wildfires.
Insurers would have had to offer four years of coverage to homeowners in successful pilot projects.
Denni Ritter, a vice president of the American Property Casualty Insurance Assn., told the committee that her trade group opposed the bill.
“While we appreciate the intent behind those conversations, those concepts do not remove our opposition, because they retain the same core flaw — substituting underwriting judgment and solvency safeguards with a statutory mandate to accept risk,” she said.
In voting against the bill Sen. Laura Richardson, (D-San Pedro), said: “Last I heard, in the United States, we don’t require any company to do anything. That’s the difference between capitalism and communism, frankly.”
The remarks against the measure prompted committee Chair Sen. Steve Padilla, (D-Chula Vista), to chastise committee members in opposition.
“I’m a little perturbed, and I’m a little disappointed, because you have someone who is trying to work with industry, who is trying to get facts and data,” he said.
Monday’s vote was the fourth time a bill that would have required insurers to offer coverage to so-called “fire hardened” homes failed in the Legislature since 2020, according to an analysis by insurance committee staff.
Fire hardening includes measures such as cutting back brush, installing fire resistant roofs and closing eaves to resist fire embers.
Pérez’s legislation was thought to have a better chance of passage because it followed the most catastrophic wildfires in U.S. history, which damaged or destroyed more than 18,000 structures and killed 31 people.
The bill was co-sponsored by the Los Angeles advocacy group Consumer Watchdog and Every Fire Survivor’s Network, a community group founded in Altadena after the fires formerly called the Eaton Fire Survivors Network.
But it also had broad support from groups such as the California Apartment Association, the California Nurses Association and California Environmental Voters.
Leading up to the fires, many insurers, citing heightened fire risk, had dropped policyholders in fire-prone neighorhoods. That forced them onto the California FAIR Plan, the state’s insurer of last resort, which offers limited but costly policies.
A Times analysis found that that in the Palisades and Eaton fire zones, the FAIR Plan’s rolls from 2020 to 2024 nearly doubled from 14,272 to 28,440. Mandating coverage has been seen as a way of reducing FAIR Plan enrollment.
“I’m disappointed this bill died in committee. Fire survivors deserved better,” Pérez said in a statement .
Also failing Monday in the committee was SB 982, a bill authored by Sen. Scott Wiener, (D-San Francisco). It would have authorized California’s attorney general to sue fossil fuel companies to recover losses from climate-induced disasters. It was opposed by the oil and gas industry.
Passing the committee were two other Pérez bills. SB 877 requires insurers to provide more transparency in the claims process. SB 878 imposes a penalty on insurers who don’t make claims payments on time.
Another bill, SB 1301, authored by insurance commissioner candidate Sen. Ben Allen, (D-Pacific Palisades), also passed. It protects policyholders from unexplained and abrupt policy non-renewals.
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Politicians in Washington and the reporters who cover them have an often adversarial relationship.
But on the last Saturday in April, they gather for an irreverent celebration of press freedom and the First Amendment at the Washington Hilton Hotel: The White House Correspondents’ Association dinner.
Hosted by the association, an organization that helps ensure access for media outlets covering the presidency, the dinner attracts Hollywood stars; politicians from both parties; and representatives of more than 100 networks, newspapers, magazines and wire services.
While The Times will have two reporters in the ballroom covering the event, the company no longer buys seats at the party, said Richard W. Stevenson, the Washington bureau chief. The decision goes back almost two decades; the last dinner The Times attended as an organization was in 2007.
“We made a judgment back then that the event had become too celebrity-focused and was undercutting our need to demonstrate to readers that we always seek to maintain a proper distance from the people we cover, many of whom attend as guests,” he said.
It’s a decision, he added, that “we have stuck by through both Republican and Democratic administrations, although we support the work of the White House Correspondents’ Association.”
Susan Wessling, The Times’s Standards editor, said the policy is a product of the organization’s desire to maintain editorial independence.
“We don’t want to leave readers with any questions about our independence and credibility by seeming to be overly friendly with people whose words and actions we need to report on,” she said.
The celebrity mentalist Oz Pearlman is headlining the evening, in lieu of the usual comedy set by the likes of Stephen Colbert and Hasan Minhaj, but all eyes will be on President Trump, who will make his first appearance at the dinner as president.
Mr. Trump has boycotted the event since 2011, when he was the butt of punchlines delivered by President Barack Obama and the talk show host Seth Meyers mocking his hair, his reality TV show and his preoccupation with the “birther” movement.
Last month, though, Mr. Trump, who has a contentious relationship with the media, announced his intention to attend this year’s dinner, where he will speak to a room full of the same reporters he often derides as “enemies of the people.”
Times reporters will be there to document the highs, the lows and the reactions in the room. A reporter for the Styles desk has also been assigned to cover the robust roster of after-parties around Washington.
Some off-duty reporters from The Times will also be present at this late-night circuit, though everyone remains cognizant of their roles, said Patrick Healy, The Times’s assistant managing editor for Standards and Trust.
“If they’re reporting, there’s a notebook or recorder out as usual,” he said. “If they’re not, they’re pros who know they’re always identifiable as Times journalists.”
For most of The Times’s reporters and editors, though, the evening will be experienced from home.
“The rest of us will be able to follow the coverage,” Mr. Stevenson said, “without having to don our tuxes or gowns.”
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