Two years after Governor Gavin Newsom signed the FAST Recovery Act into law, the $20 minimum wage for fast-food workers in California is drawing criticism for its unintended economic impacts. Initially praised as a landmark win for workers, the legislation is now linked to widespread job losses, business closures, and rising prices.
Despite its intended benefits, the law has coincided with the elimination of nearly 20,000 fast-food jobs in California, according to the Employment Policies Institute (EPI). This accounts for about a quarter of all fast-food job losses nationwide during the same period. Analysts point to high labor costs as a key factor behind the trend, affecting both major chains and small franchises.
Several well-known fast-food operators have either closed locations or laid off employees. Two large Pizza Hut franchisees laid off over 1,200 delivery drivers, while other chains, such as Mod Pizza and Foster’s Freeze, shut down locations altogether. Small-business owners, already operating on slim margins, have found it increasingly difficult to stay afloat under the new wage rules.
In response to higher labor costs, many restaurants are cutting employee hours or turning to automation to maintain profitability. EPI reports that non-tipped workers have lost an average of 250 work hours annually, equivalent to about $4,000 in lost income based on previous wage levels. The shift is impacting workers’ stability and long-term earning potential.
Consumers are also feeling the effects. Data from Datassential shows that fast-food prices in California have increased by over 13% since April 2024 — almost double the national average. For families already coping with inflation, these increases make basic meals noticeably more expensive.
While supporters cite studies suggesting minimal negative effects, growing concerns from businesses and workers suggest the law’s outcomes have diverged from its original promise. The FAST Act has become a flashpoint in debates over wage policy, economic balance, and political leadership.
