On April 1, 2024, California raised its minimum wage from $16 to $20 per hour for fast-food workers employed at chains with more than 60 locations nationwide. This increase went entirely into effect at once—six months after the passage of Assembly Bill (AB) 1228 in September 2023—resulting in an approximate 8 percent wage increase in California’s fast-food sector relative to the fast-food sector elsewhere in the country. This was one of the largest one-time minimum wage increases in US history, and one of the few focused on a single industry in recent decades.

Our research analyzes the effects of AB 1228 on fast-food employment using the Quarterly Census of Employment and Wages from the Bureau of Labor Statistics. Our findings reveal that employment in California’s fast-food sector declined by 2.7 percent between September 2023 and September 2024 relative to fast-food employment elsewhere in the United States. However, fast-food employment in California grew slightly faster than in the rest of the country in the two years prior to the enactment of AB 1228. After accounting for this trend, our findings suggest a greater employment decline of 3.2 percent due to AB 1228. A potential concern is that these estimated changes in fast-food employment may have been due to changes in California’s overall labor market. We examined this possibility by comparing changes in employment among California industries that employ few minimum wage workers with similar industries nationwide. This approach, namely adjusting for the performance of other industries, suggests that AB 1228 reduced fast-food employment by 3.6 percent. Our median estimate suggests that California lost about 18,000 jobs that could have been retained if AB 1228 had not been passed.

Several factors suggest that our estimates likely understate the employment effects of increasing the minimum wage by $4 in a single sector. First, not all fast-food restaurants were subject to AB 1228 because the law only applies to chains with at least 60 locations nationwide. Second, several municipalities in the state have imposed higher minimum wages than the state-level wage, including some of the largest cities, such as Los Angeles ($17.24 in July 2024), San Francisco ($18.67 in July 2024), San Jose ($17.55 in January 2024), and San Diego ($16.85 in January 2024). This means AB 1228 did not raise the minimum wage by $4 for all fast-food workers. Third, 28 other states increased their minimum wage after the passage of AB 1228, and several increased theirs by more than $1 per hour. If those policies also reduced employment, then comparing employment changes in California with those in the rest of the country may decrease the size of our estimates. Indeed, our findings reveal a modestly larger decline in California’s fast-food employment when we compare California only with states that did not raise their minimum wage between September 2023 and September 2024.

Our research also examines the possibility that AB 1228 affected California’s full-service restaurant sector, which was subject to the state’s general minimum wage increase of $0.50, from $15.50 to $16.00 per hour, in January 2024. Our estimates suggest that AB 1228 reduced employment among full-service restaurants by 1.55 to 2.75 percent—smaller decreases than those we estimated for the fast-food sector. Since full-service restaurants often compete with fast-food restaurants for staff, AB 1228 may have made it more difficult for full-service restaurants to attract workers. Additionally, full-service restaurants may have reduced employment in anticipation of future minimum wage increases in their sector as well.

Future research should continue to track AB 1228’s effects on employment and use the wide variation in local minimum wages in California to gather additional evidence. Furthermore, AB 1228 may have affected other factors besides employment, such as hours of work, prices, establishment closures, education requirements, workers’ search effort, nonwage benefits, work effort, income inequality, and compliance with minimum wage laws. Finally, the interplay between California’s fast-food and full-service restaurant sectors warrants further examination. Future research should explore how regulation in one sector affects other sectors that compete in closely related labor and product markets.

Note:
This research brief is based on Jeffrey Clemens et al., “Did California’s Fast Food Minimum Wage Reduce Employment?,” National Bureau of Economic Research Working Paper no. 34033, July 2025.