August 13, 2026 10:20AM # California’s Minimum Wage Hike By [Jeffrey Miron](https://www.cato.org/people/jeffrey-miron) --- SHARE Listen to this article Generated with [ ElevenLabs](https://elevenlabs.io/) AI technology. Loading the [Elevenlabs Text to Speech](https://elevenlabs.io/text-to-speech) AudioNative Player... Firms respond to [minimum wage](https://www.nytimes.com/2021/03/17/opinion/the-argument-minimum-wage.html?) hikes in multiple ways. [One study](https://www.cato.org/research-briefs-economic-policy/effects-californias-20-fast-food-minimum-wage-prices) considers a 2023 California bill that raised the minimum wage for fast-food workers from $16 to $20 per hour. The researchers estimated > a 4.9–5.1 percent increase in fast-food prices and a 2.1–2.2 percent increase in full-service prices.… Additionally, \[the\] findings suggest that price increases reduced consumers’ demand for fast food by 3.9–4.1 percent and for full-service meals by 1.7–1.8 percent. Further, the wage hike had > distributional implications, as lower-income households spend a larger share of their budgets at fast-food restaurants. All in all, this > large, sector-specific minimum wage increase raised labor costs, \[which\] firms passed … through to consumers by raising prices, and the resulting decline in demand reduced employment. Exactly what standard economics would predict. *Cross-posted from* [*Substack*](https://jeffreymiron.substack.com/)*.* ##### Related Tags [Affordability](https://www.cato.org/affordability), [Economics](https://www.cato.org/economics) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).