Business
The fast-food industry claims the California minimum wage law is costing jobs. Its numbers are fake
The fast-food industry has been wringing its hands over the devastating impact on its business from California’s new minimum wage law for its workers.
Their raw figures certainly seems to bear that out. A full-page ad recently placed in USA Today by the California Business and Industrial Alliance asserted that nearly 10,000 fast-food jobs had been lost in the state since Gov. Gavin Newsom signed the law in September.
The ad listed a dozen chains, from Pizza Hut to Cinnabon, whose local franchisees had cut employment or raised prices, or are considering taking those steps. According to the ad, the chains were “victims of Newsom’s minimum wage,” which increased the minimum wage in fast food to $20 from $16, starting April 1.
The rapid job cuts, rising prices, and business closures are a direct result of Governor Newsom and this short-sighted legislation
— Business lobbyist Tom Manzo, touting misleading statistics
Here’s something you might want to know about this claim. It’s baloney, sliced thick. In fact, from September through January, the period covered by the ad, fast-food employment in California has gone up, as tracked by the Bureau of Labor Statistics and the Federal Reserve. The claim that it has fallen represents a flagrant misrepresentation of government employment figures.
Something else the ad doesn’t tell you is that after January, fast-food employment continued to rise. As of April, employment in the limited-service restaurant sector that includes fast-food establishments was higher by nearly 7,000 jobs than it was in April 2023, months before Newsom signed the minimum wage bill.
Despite that, the job-loss figure and finger-pointing at the minimum wage law have rocketed around the business press and conservative media, from the Wall Street Journal to the New York Post to the website of the conservative Hoover Institution.
We’ll be taking a closer look at the corporate lobbyist sleight-of-hand that makes job gains look like job losses. But first, a quick trot around the fast-food economic landscape generally.
Few would argue that the restaurant business is easy, whether we’re talking about high-end sit-down dining, kiosks and food trucks, or franchised fast-food chains. The cost of labor is among the many expenses that owners have to deal with, but in recent years far from the worst. That would be inflation in the cost of food.
Newport Beach-based Chipotle Mexican Grill, for example, disclosed in its most recent annual report that food, beverage and packaging cost it $2.9 billion last year, up from $2.6 billion in 2022 — though those costs declined as a share of revenue to 29.5% from 30.1%. Labor costs in 2023 came to $2.4 billion, but fell to 24.7% of revenue from 25.5% in 2022.
At Costa Mesa-based El Pollo Loco, labor and related costs fell last year by $3.5 million, or 2.7%, despite an increase of $4.1 million that the company attributed to higher minimum wages enacted in the past as well as “competitive pressure” — in other words, the necessity of paying more to attract employees in a tight labor market.
Then there’s Rubio’s Coastal Grill. On June 3 the Carlsbad chain confirmed that it had closed 48 of its California restaurants, about one-third of its 134 locations. As my colleague Don Lee reported, Rubio’s attributed the closings to the rising cost of doing business in California.
There’s more to the story, however. The biggest expense Rubio’s has been facing is debt — a burden that has grown since the chain was acquired in 2010 by the private equity firm Mill Road Capital. By 2020, the chain owed $72.3 million, and it filed for bankruptcy. Indeed, in its full declaration with the bankruptcy court filed on June 5, the company acknowledged that along with increases in the minimum wage, it was facing an “unsustainable debt burden.”
The company emerged from bankruptcy at the end of 2020 with settlements that included a reduction in its debt load. Then came the pandemic, a significant headwind. Among its struggles was again its debt — $72.9 million owed to its largest creditor, TREW Capital Management, a firm that specializes in lending to distressed restaurant businesses. It filed for bankruptcy again on June 5, two days after announcing its store closings. The case is pending.
Fast-food and other restaurant jobs slump every year from the fall through January, due to seasonal factors (red line); seasonal adjustments (blue line) give a more accurate picture of employment trends. The sharp decline in 2020 was caused by the pandemic.
(Federal Reserve Bank of St. Louis)
It’s worth noting that high debt is often a feature of private-equity takeovers — in such cases saddling an acquired company with debt gives the acquirers a means to extract cash from their companies, even if it complicates the companies’ path to profitability. Whether that’s a factor in Rubio’s recent difficulties isn’t clear.
That brings us back to the claim that job losses among California’s fast-food restaurants are due to the new minimum wage law.
The assertion appears to have originated with the Wall Street Journal, which reported on March 25 that restaurants across California were cutting jobs in anticipation of the minimum wage increase taking effect on April 1.
The article stated that employment in California’s fast food and “other limited-service eateries was 726,600 in January, “down 1.3% from last September,” when Newsom signed the minimum wage law. That worked out to employment of 736,170 in September, for a purported loss of 9,570 jobs from September through January.
The Journal’s numbers were used as grist by UCLA economics professor Lee E. Ohanian for an article he published on April 24 on the website of the Hoover Institution, where he is a senior fellow.
Ohanian wrote that the pace of the job loss in fast-food was far greater than the overall decline in private employment in California from September through January, “which makes 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.
CABIA cited Ohanian’s article as the source for its claim in its USA Today ad that “nearly 10,000” fast-food jobs were lost due to the minimum wage law. “The rapid job cuts, rising prices, and business closures are a direct result of Governor Newsom and this short-sighted legislation,” CABIA founder and president Tom Manzo says on the organization’s website.
Here’s the problem with that figure: It’s derived from a government statistic that is not seasonally adjusted. That’s crucial when tracking jobs in seasonal industries, such as restaurants, because their business and consequently employment fluctuate in predictable patterns through the year. For this reason, economists vastly prefer seasonally adjusted figures when plotting out employment trendlines in those industries.
The Wall Street Journal’s figures correspond to non-seasonally adjusted figures for California fast-food employment published by the Bureau of Labor Statistics. (I’m indebted to nonpareil financial blogger Barry Ritholtz and his colleague, the pseudonymous Invictus, for spotlighting this issue.)
Figures for California fast-food restaurants from the Federal Reserve Bank of St. Louis show that on a seasonally adjusted basis employment actually rose in the September-to-January period by 6,335 jobs, from 736,160 to 742,495.
That’s not to say that there haven’t been employment cutbacks this year by some fast-food chains and other companies in hospitality industries. From the vantage point of laid-off workers, the manipulation of statistics by their employers doesn’t ease the pain of losing their jobs.
Still, as Ritholtz and Invictus point out, it’s hornbook economics that the proper way to deal with seasonally adjusted figures is to use year-to-year comparisons, which obviate seasonal trends.
Doing so with the California fast-food statistics give us a different picture from the one that CABIA paints. In that business sector, September employment rose from a seasonally adjusted 730,000 in 2022 to 741,079 in 2024. In January, employment rose from 732,738 in 2023 to 742,495 this year.
Restaurant lobbyists can’t pretend that they’re unfamiliar with the concept of seasonality. It’s been a known feature of the business since, like, forever.
The restaurant consultantship Toast even offers tips to restaurant owners on how to manage the phenomenon, noting that “April to September is the busiest season of the year,” largely because that period encompasses Mother’s Day and Father’s Day, “two of the busiest restaurant days of the year,” and because good weather encourages customers to eat out more often.
What’s the slowest period? November to January, “when many people travel for holidays like Thanksgiving or Christmas and spend time cooking and eating with family.”
In other words, the lobbyists, the Journal and their followers all based their expressions of concern on a known pattern in which restaurant employment peaks into September and then slumps through January — every year.
They chose to blame the pattern on the California minimum wage law, which plainly had nothing to do with it. One can’t look into their hearts and souls, but under the circumstances their arguments seem more than a teensy bit cynical.
The author of the Wall Street Journal article, Heather Haddon, didn’t reply to my inquiry about why she appeared to use non-seasonally adjusted figures when the adjusted figures were more appropriate. Tom Manzo, the founder and president of CABIA, didn’t respond to my request for comment.
Ohanian acknowledged by email that “if the data are not seasonally adjusted, then no conclusions can be drawn from those data regarding AB 1228,” the minimum wage law. He said he interpreted the Wall Street Journal’s figures as seasonally adjusted and said he would query the Journal about the issue in anticipation of writing about the issue later this summer.
He did observe, quite properly, that the labor cost increase from the law was large and that “if franchisees continue to face large food cost increases later this year, then the industry will really struggle.” Fast-food companies already have instituted sizable price increases to cover their higher expenses, he observed. “The question thus becomes how sensitive are fast-food consumers to higher prices,” a topic he says he will be researching as the year goes on.
Residents in the city of Monterey Park will be the first in the nation to vote on a permanent ban on data centers Tuesday.
If approved, Measure NDC would prohibit data centers within the city limits and could only be overturned by another vote.
Yard signs saying “No Data Center” in English and Chinese with images of dragons line sidewalks in the San Gabriel Valley city.
As a wave of data center opposition sweeps the country, numerous towns and counties across the U.S. have instituted temporary moratoria and other restrictions on the facilities. But only a handful have instituted indefinite bans, and just four other towns have sent related matters to the ballot.
Supporters are hoping the vote will set a precedent for the rest of the region, where residents are fighting proposals in Vernon and City of Industry.
“This is about as permanent a ban as we can get,” said Steven Kung, co-founder of the group No Data Center Monterey Park. “Winning Measure NDC would send a huge message to the rest of the San Gabriel Valley about how residents don’t want data centers.”
The ballot measure emerged from the fight against a 247,000-square-foot center proposed in 2024 by the Australian-owned investment firm HMC StratCap for a residential area in Monterey Park.
The facility would have sat less than 500 feet away from the nearest home and used three times the electricity of the 60,000-person, predominantly Asian American city.
While the developer touted the potential for jobs and tax revenue, residents expressed concerns about noise and air pollution, rising electricity rates and a potential to lower property values.
The company pulled its plans in late March following public outcry and a March 4 city council vote to extend a temporary data center moratorium and place a ban on Tuesday’s ballot.
In a letter to the city council, HMC StratCap said it would pursue a different use for the land and would not engage in a ballot measure fight.
The city council later banned data centers indefinitely, the first in California to do so, said Mayor Elizabeth Yang. But she’s still been out campaigning for the measure with all four other council members.
“If a council puts in an ordinance, a future council can reverse it too,” said Yang. “With the ballot measure, unbanning it is a lot harder because you need the entire city to vote on it.”
The measure proposes the ban “to protect air quality, drinking water resources, and public health” and “prevent impacts to electricity and water rates.”
While California places third in the country for existing data centers with about 300 facilities, it hasn’t been a hot spot in the recent AI-driven data center boom. High electricity rates, expensive land and regulatory hurdles mean that fewer, and smaller, facilities are currently planned than in Virginia, Texas, Georgia, Illinois or Arizona.
“Most of California’s data centers are small by today’s standards,” said Shaolei Ren, an engineering professor at UC Riverside who studies how to reduce the environmental impacts of data centers. “Ten years ago, they would be medium-sized, but the power demand for new AI data centers has increased a lot.”
The average operating data center demands 45 megawatts, according to the Washington Post, while the average planned one would draw 430 MW. The one proposed for Monterey Park would have required about 50 MW at peak demand.
As proposals crop up in SoCal, they’re met with fierce opposition. Montebello, El Monte and Baldwin Park have all enacted temporary moratoria, and Alhambra recently banned data centers as part of a zoning code update. City of Industry, Vernon, City of Commerce and Santa Fe Springs are moving in the other direction, trying to court developers and streamline data center approvals. Community groups are fighting that.
Outside the San Gabriel Valley, residents of Coachella and Imperial County are showing up in droves to protest local proposals.
Matthew Shaw, a volunteer with the Coalition for Responsible Data Center Development, who recently published a report on opposition to AI data centers, said a vote to ban them in Monterey Park “would lead to copycats, partially because so many groups are just opposed to any data center development at all.”
While there is no formal opposition to Measure NDC, some building trades like Ironworker Local 433 supported the Monterey Park data center when it was still live before city council. Those in the data center industry are lamenting the state of public opinion.
“These are multi-billion-dollar assets that are built by multi-trillion-dollar companies. These things will get done,” said Mehdi Paryavi, chairman of the International Data Center Authority. “My biggest problem is that our industry does not invest enough in community engagement.”
Paryavi said towns that seek to limit data centers are missing out on thousands of jobs generated by data center construction, operations and customers, as well as faster artificial intelligence speeds and better performance.
Kung said local community organizers are “looking at the empirical evidence” and seeing a ban as a win.
“We’ve never seen a city that embraces a data center and is like, ‘Look how our quality of life has increased, look how all the revenue has gone into citywide improvements,’” he said. “That just doesn’t exist.”
Business
Company wants to revive Primm, the gambling spot turned ghost town. Owners say: Not so fast
A once-popular gambling mecca at the California-Nevada border that faded into obscurity could get a second life.
A Las Vegas-based truck-stop company is reportedly hoping to revive Primm to its former glory. But the would-be comeback faces a hurdle: striking a deal with the landowners, the Primm family.
In an interview with the Las Vegas Review-Journal, LV Petroleum Chief Executive Kris Roach shared his plans for the state-line ghost town.
“We would like to operate everything at the exit, the hotels, the casinos, the truck stop, the stores, pretty much from farm to table,” Roach told the Review-Journal. “We would like to revive the whole exit.”
But Cory Clemetson, president of Primm and grandson of founder Ernie Primm, said in a statement shared with The Times: “Recent reports suggesting that an agreement with any specific potential partner may be imminent are overstated and premature.”
LV Petroleum is an active operator of convenience stores and travel centers with more than 80 locations across the United States, according to its LinkedIn page.
In May, Affinity Gaming, which currently operates several businesses on behalf of the Primm family, announced a plan to close most properties it had been leasing by July 4.
Whiskey Pete’s, which along with its companion resorts at Primm drew in visitors with low prices and deals, closed in 2024. Buffalo Bill’s, which featured a 209-foot-tall roller coaster, concluded its operations in 2025.
Primm Valley Resorts, the sole operating casino in Primm, remains open until the July deadline. Other stores affected by the closure include the Primm Center, the Flying J, and the Primm Lotto Store, according to KSNV NBC Las Vegas.
Primm, an alternative to Vegas for Southern Californians that cut 45 minutes off the drive, suffered a decline in tourism after the COVID-19 pandemic and saw increased competition from tribal casinos in California.
Roach told the Las Vegas Review-Journal that he did not want to see the businesses go dark, adding that 344 employees would lose their jobs following the closure. Roach said, among his plans, would be reopening Whiskey Pete’s.
But the Primm family says a deal is far from done.
“Our family is currently considering opportunities involving multiple well-established operators that have successfully operated similar hotel-casino properties in Nevada,” Clemetson said. “We will continue to explore all viable options as we work toward the best possible solution especially for the hundreds of Primm employees and their families dealing with this difficult situation.”
Modern-day Primm began in the 1950s when Ernie Primm established a motel and coffee shop at the state-border location. In the 1970s, he and son Gary expanded operations to build Whiskey Pete’s. Once called State Line, the area was renamed Primm in 1996 after Ernie’s death.
Anthropic, the company behind the powerful artificial intelligence chatbot Claude, has filed to get ready to list its shares.
The development comes days after it raised $65 billion, valuing it at $965 billion.
The company, founded in 2021 by a breakaway faction from OpenAI, was viewed as an upstart that tailored its chatbots to the needs of businesses and developers, rather than consumers.
Late last year, the release of its agentic coding assistant propelled it ahead in the AI race, as the company’s annualized revenue skyrocketed from $9 billion at the end of 2025 to more than $47 billion in May.
“This gives us the option to go public after the SEC completes its review. The proposed initial public offering will depend on market conditions and other factors,” the company said in a statement, announcing the confidential filing on its website.
The number of shares to be offered and the price have not yet been set, the company said. Last week, Anthropic released its latest model, Claude Opus 4.8, to the public.
The upstart began gaining ground against its larger rival OpenAI late last year with the release of its Claude Opus 4.5, which became a huge hit among developers and enthusiasts who were able to merely describe an app or website or online dashboard or research problem in English, and have the coding agent complete the task. .
As adoption of Claude grew, OpenAI has been juggling numerous big bets, including the shuttered text-to-video model Sora, agentic shopping and an AI-native browser, with mounting challenges to monetize its base of 800 million users. The company has since streamlined its operations, focusing on its coding product, Codex, and continues to invest in image generation and robotics.
The announcement puts Anthropic ahead of OpenAI, which reportedly hired bankers Goldman Sachs and Morgan Stanley in the race to go public. Anthropic now eclipses its rival, which was valued at $852 billion in March.
Elon Musk’s xAI, which operates the chatbot Grok, is a part of SpaceX that is gearing up to go public next week. It will be the largest initial public offering of stock in history, and a successful listing will make Musk the first trillionaire.
The blockbuster year for Silicon Valley IPOs will test people’s appetite to invest in the promise of artificial intelligence, amid worries and warnings of an AI bubble. .
Nasdaq introduced a rule change this year, shortening the three-month waiting period for stocks to be included in the index to 15 days.
It was done to accommodate monster listings such as SpaceX. The cooling-off period allows newly listed stocks to stabilize before passive index funds pick them up, but indices said it’s a much-needed update, as companies stay private longer, are more mature and have much larger valuations than in the past.
Dario Amodei, co-founder of Anthropic, has been outspoken about the risks of artificial intelligence wiping out half of all entry-level jobs and driving unemployment up by 20%. Some in the Trump administration have criticized his views as alarmist and accused his advocacy of AI safety of being an attempt at regulatory capture to create onerous compliance barriers that would restrict AI development to a handful of large companies, locking out smaller competitors.
In March, the company sued the Pentagon after it was designated as a “supply chain risk” for refusing to allow the use of its AI model for domestic mass surveillance or fully autonomous weapons.
The White House softened its posture against Anthropic in May, after the release of its AI model Claude Mythos, which proved itself adept at finding critical software bugs. The incident prompted a U-turn in the Trump administration’s laissez-faire approach to AI regulation and led to the consideration of safety testing before broader public release.
Anthropic’s Mythos model has now become a tool of geopolitical advantage for the U.S., as governments across the globe, including the European Union, have requested access to the powerful tool to identify and patch vulnerabilities in the banking and financial system that could be exposed to hacking.
The explosive demand has increased Anthropic’s need for AI chips, causing previous outages and forcing the company to set usage limits for users. To secure access to vital hardware, the company signed agreements with Amazon, Google, Broadcom and SpaceX in April for new computing capacity.
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