Federal data says California lost 4,256 fast food jobs since $20 wage took effect

By Kenneth Schrupp
The Center Square

California has lost more than 4,000 fast food jobs since the state’s $20 per hour minimum wage for fast food went into effect while other states have grown.

California Gov. Gavin Newsom wrote in a September Fox News opinion column that “​​Since the law was enacted [in April 2023], California has added 11,000 new jobs in the industry,” while the the Employment Policies Institute, a restaurant industry think tank, says fast food jobs have declined by over 6,000 jobs since the law was signed in September 2023. 

With fast food jobs bouncing widely from their low point in the winter to their high point in the summer, both EPI and Newsom appear to be selectively choosing their data to bolster their cases, but the latest quarterly report from the Bureau of Labor Statistics shows an unambiguous decline of 4,256 fast food jobs through June since the fast food minimum wage rose from $16 to $20 per hour at the start of April.

Food jobs grew from March — before the wage took effect — to June of 2024 by only 406 jobs, while the year before they grew by 9,118 jobs in the typical hiring ramp-up into the busier summer months, says BLS data analyzed by the Employment Policies Institute.

According to Revenue Management Solutions, a company that analyzes restaurant transactions to optimize menu pricing, California menu prices in June were up 7.5% year-over-year, but foot traffic is down — nationwide menu prices were up 3.1% with foot traffic down 3.6% compared to the year prior. 

“This decline is a clear indication that customers are opting to skip a fast food visit altogether rather than pay higher menu prices,” said RMS. 

Large corporations have looked to custom-built robots to cut their costs, with Chipotle piloting a machine that automatically makes and fills up burrito bowls, and another that automatically pits and peels avocados, but that hasn’t translated to lower prices for consumers.

While official submitted data showed fast food jobs in June 2024 were down by 10,698 compared to June 2023, the survey-based data cited by Newsom showed a much smaller decline of just 900 jobs over the same period.

Newsom’s office dismissed the BLS data cited by EPI, pointing instead at EPI’s history and funding.

“This is a bogus industry group that's funded by corporate restaurant chains to protect their profits. This summer, fast food jobs peaked at numbers never seen before, and now multiple independent research studies are backing up the data,” said a Newsom spokesperson to The Center Square. “What’s good for workers is good for business.”

Experts say the divergence between Newsom’s and EPI’s reporting of federal labor data was based on Newsom's use of surveys that function as more of a general economic barometer, and EPI’s use of slower, but more accurate quarterly reports covering more businesses.

“A big problem in general is that the monthly data may be significantly overstating employment in the industry,” said Lee Ohanian, an economics professor and Director of the Ettinger Family Program in Macroeconomic Research at UCLA, to The Center Square. “Specifically, the establishment survey numbers are those typically reported, but there is a growing discrepancy between the establishment survey numbers compared to those from the quarterly census of employment and wages (QCEW). The QCEW covers over 95 percent of businesses.” 

Between September 2023 and June 2024, California has lost 0.3% of its private-sector jobs, while the state’s fast food sector was hit especially hard, losing 1.1% of its jobs. The number of jobs in the national fast food industry, which includes California, grew by 1.6% over the same time period, suggesting California’s fast food job losses are an abnormality. 

For Newsom’s claim to hold true — the law went into effect on April 1, 2024 — the ranks of California’s fast food workers would have had to have grown by at least 10,594 jobs in July, the month Newsom’s OpEd cites. Newsom’s cited dataset showed a July increase of just 3,900 fast food jobs — once the business-submitted data comes out in the next several months, those numbers could be even lower.

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