In April 2024, California implemented a landmark law that raised the minimum wage for fast-food workers at large chains to $20 an hour. For many, it was a long-overdue win in the fight for a living wage. But over a year later, the results have been mixed—and a new study suggests that thousands of workers may have lost their jobs as a result.
A July 2025 report from the National Bureau of Economic Research (NBER) found that California’s fast-food sector shed an estimated 18,000 jobs compared to where it would have been without the wage hike. For workers on the ground, this raises a critical question: what good is higher pay if your job no longer exists?
📊 The Numbers: What the NBER Study Found
The NBER study examined employment trends across the U.S. fast-food industry and isolated the effects of California’s industry-specific wage hike. Key findings include:
- Employment dropped by 2.7% to 3.2% relative to other states between September 2023 and September 2024.
- That amounts to 18,000 jobs lost across the fast-food sector in California.
- Researchers noted that the effect was “several times larger than typical impacts observed in studies of smaller minimum wage increases.”
- Between 29% to 49% of workers’ expected wage gains were offset by employment losses and reduced hours.
The law targeted large chains with over 60 national locations—like McDonald’s, Pizza Hut, and Jack in the Box—while exempting smaller operations. But even these large employers have begun pushing back, automating more tasks, cutting hours, and restructuring operations to reduce labor costs.
The Legal and Economic Trade-Offs
From a workers’ rights perspective, higher pay is a critical step forward—especially in high-cost regions like Los Angeles, San Francisco, and Orange County. But the economic fallout shows that wage increases without accompanying structural support can backfire.
Here’s what workers should understand:
🔸1. Higher Wages Are Only One Piece of the Puzzle
Fast-food workers gained better hourly rates, but many now report:
- Decreased weekly hours
- Shift reductions with little notice
- Difficulty finding new fast-food jobs
This is especially problematic for vulnerable workers, including:
- Parents with limited childcare options
- Students juggling class schedules
- Older workers without the digital skills needed for automated kiosks
🔸2. Job Losses May Open the Door to Retaliation or Misclassification
We’re already seeing reports of:
- Workers being misclassified as independent contractors to avoid wage laws
- Employers retaliating against employees who speak out
- Scheduling manipulation to avoid offering benefits
If you’ve experienced any of these, you may have a case under California labor law.
🔸3. There’s a Legal Question Around AB 1228 Implementation
Assembly Bill 1228 (AB 1228), which authorized the $20 minimum wage, was structured to apply only to major fast-food brands. But the law didn’t offer:
- A phase-in period for employers to adjust
- Financial support or tax relief for businesses facing immediate labor cost spikes
- Robust enforcement mechanisms to protect against wage retaliation or manipulation
In our view, this oversight has created the conditions for bad actors to exploit the transition.
Corporate Response: Cutting Jobs, Not CEO Pay
Despite the wage hike, many of the largest fast-food corporations continue to report strong profits—and have not cut executive compensation. Instead, we’ve seen:
- Store closures in less profitable areas
- Layoffs and restructuring
- Accelerated investments in automation and outsourcing
McDonald’s, for instance, reported that California is currently its most challenging market, and Pizza Hut began laying off delivery drivers shortly after the law passed.
Workers Still Have Rights—Even in a Shifting Economy
If you work (or recently worked) for a fast-food chain in California and your hours were cut, your job eliminated, or you’re being forced into independent contractor status—you may be entitled to legal protection under:
- California Labor Code §§ 226, 510, 1194, 2802
- AB 1228 implementation guidelines
- FEHA and anti-retaliation provisions
- Federal wage and hour laws
At Employees First Labor Law, we’re investigating claims related to:
- Illegal terminations following wage hikes
- Shift manipulation and wage theft
- Employer retaliation and pressure to quit
- Misclassification to avoid compliance with AB 1228
💬 What Should You Do If You’ve Been Affected?
✅ Don’t assume this is just “business as usual.”
If your employment status changed right after the wage increase, it may not be a coincidence.
✅ Keep your records.
Save your pay stubs, schedules, texts from managers, and any termination documents.
✅ Call us.
We’ll evaluate your situation for free—and if your rights were violated, we’ll fight to make it right.
Know Your Rights. Don’t Be Intimidated.
If you’re being mistreated under a contract, denied fair pay, or forced to work under exploitative conditions, you don’t have to stay silent. Whether you’re an athlete, gig worker, tech contractor, or hourly employee, California law protects you—and so do we.
Contact Us for a Free, Confidential Consultation
If you’re experiencing issues at work, call Employees First Labor Law today. We’ll evaluate your case and help you understand your legal options.
