Two years after California Governor Gavin Newsom signed the FAST Recovery Act amid cheers from union leaders and flashing cameras, the law is now leaving behind a wave of layoffs, shuttered restaurants, and frustrated consumers.
The measure, which took effect in 2023, established a $20 minimum wage for fast-food workers across the state. At the signing, Newsom praised it as a “win-win-win” for employees, restaurant owners, and customers. Yet the latest figures tell a very different story.
According to the Employment Policies Institute (EPI), California has lost nearly 20,000 fast-food jobs since the law’s approval — representing nearly one-quarter of all such job losses nationwide over the same timeframe.
The data, drawn from the Bureau of Labor Statistics, paint a grim picture for one of California’s largest entry-level job sectors.
These losses aren’t just numbers on a spreadsheet. Two major Pizza Hut franchisees recently laid off more than 1,200 delivery drivers, citing skyrocketing labor costs. Other chains, including Mod Pizza and Foster’s Freeze, have opted to close their California locations entirely. For many small franchise owners, already operating on razor-thin margins, the spike in payroll costs wiped out profitability overnight.
Even those who remain employed are feeling the squeeze. EPI estimates that non-tipped restaurant workers have seen their annual hours cut by about 250 — the equivalent of roughly $4,000 in lost income compared to the state’s previous minimum wage.
To manage rising expenses, many restaurant owners are turning to kiosks and self-service technology to replace part-time staff.
“Newsom’s $20 wage has proven to be little more than an ego boost for the governor at the expense of fast-food workers,” said EPI research director Rebekah Paxton. “His claim that the law is a ‘win’ is out of touch with reality, and lawmakers considering similar policies should think twice.”
The impact has extended to consumers as well. Menu data from Datassential show that fast-food prices in California rose more than 13% after April 2024 — nearly double the increase seen in the rest of the country. Families already struggling with inflation now face steeper bills for everyday meals.
Small businesses have been hit hardest. The American Cornerstone Institute noted that, unlike major corporations, mom-and-pop shops cannot absorb the surge in payroll costs, forcing them to either cut staff or shut their doors.
“A single statewide minimum wage doesn’t make sense for a state as large and diverse as California,” the group argued, pointing out that living costs in San Francisco differ dramatically from those in rural areas like the Central Valley.
The fallout has intensified criticism of Newsom’s leadership. Detractors say he ignored basic economic warnings to deliver a political victory for organized labor.
“This should be a wake-up call for Newsom and other policymakers pushing drastic wage hikes that come with unintended consequences,” Paxton said.
Supporters of the law, meanwhile, cite a UC-Berkeley study claiming that the wage increase hasn’t reduced employment and has only caused modest price hikes of around 2%. But business groups and many workers argue that the study overlooks the real-world layoffs, closures, and reduced hours occurring across the state.
To many Californians, the situation symbolizes a wider gap between Newsom’s progressive promises and economic reality. The governor has yet to directly address the latest data, and critics suggest his silence speaks volumes. “His office isn’t responding because the numbers speak for themselves,” said one franchise owner.
The political implications are significant. Newsom is often mentioned as a potential future Democratic presidential contender — but policies like the FAST Recovery Act, once hailed as national models, are now being used as cautionary examples of government overreach.
“California was the experiment, and it failed,” said one Republican strategist. “If Democrats try to expand this nationwide, it will spell disaster for workers and consumers alike.”
For now, the damage in California is clear: tens of thousands of jobs lost, hours reduced, restaurants closed, and fast-food prices rising faster than anywhere else in the nation.
What was once celebrated as a bold policy innovation is now viewed — even by many workers it aimed to help — as a self-inflicted economic wound.
