California Gov. Gavin Newsom (D) once called his $20 fast-food minimum wage law a “win-win-win.”
Two years later, the fallout is anything but a victory.
The FAST Recovery Act, which took effect in 2023, was touted by Newsom as a landmark for workers, owners, and customers.
Instead, it has triggered layoffs, closures, and higher prices across the state.
According to the Employment Policies Institute, California has lost nearly 20,000 fast-food jobs since the law’s signing. That represents about one-quarter of all fast-food job losses nationwide.
The damage is being felt on the ground.
Two Pizza Hut franchisees laid off more than 1,200 delivery drivers, directly citing soaring labor costs.
Chains like Mod Pizza and Foster’s Freeze shut down California locations altogether, per the Conservative Brief.
Rebekah Paxton, research director at the EPI, said, “Newsom’s $20 wage has turned out to be nothing more than a boost to his own ego at the expense of fast-food workers. His consistent claim that the law is a ‘win’ is out of touch with reality.”
Workers who have kept their jobs aren’t celebrating either. EPI estimates non-tipped workers have seen their hours slashed by an average of 250 per year. That equals roughly $4,000 in lost wages under the old system.
The rise of kiosks and automation is accelerating. Franchise owners are cutting staff and leaning on self-ordering technology to survive the higher costs. Many part-timers are being replaced by machines.
Consumers are being squeezed as well. Datassential found fast-food prices in California jumped more than 13% after April 2024, almost double the rest of the nation’s increase. Families already dealing with inflation are now paying more for basic meals.
The American Cornerstone Institute warned that the one-size-fits-all mandate hit small businesses hardest. “In the same manner, a state-wide minimum wage doesn’t make sense when applied uniformly across a state as big as California,” the group said.
For mom-and-pop franchisees, razor-thin margins disappeared overnight. Many have been left with two options: cut staff or close doors entirely.
Critics argue Newsom ignored basic economic warnings. Paxton said, “This should be a wake-up call for Newsom and other policymakers pushing for drastic wage hikes that will cause unintended consequences.”
Supporters of the law cite a UC-Berkeley study claiming the wage hike did not cut jobs and only raised prices modestly by about 2%. But business groups dismiss that study, saying it overlooks the closures, layoffs, and lost hours now hitting the state.
One franchisee said, “His office isn’t responding because the numbers speak for themselves.”
Republican strategist reactions have been blunt. “California was the test case, and it failed. If Democrats try to scale this nationwide, the result will be disaster for workers and consumers alike.”
The political implications for Newsom are serious. Once floated as a presidential contender, he is now facing mounting criticism that his signature wage law has become a national cautionary tale.
For Californians, the reality is measurable: tens of thousands of jobs lost, hours cut, businesses shuttered, and prices surging. What Newsom hailed as progress is being called by many of his own workers a self-inflicted wound.
