A statewide minimum wage increase raising fast food worker pay to $20 an hour was intended to support struggling employees across California.
But a new study from researchers at University of California, Santa Cruz suggests the policy may be producing unintended consequences.
According to the report, while more people are applying for fast food jobs due to higher wages, many are not seeing increased hours or even securing employment at all.
New study questions impact of California’s $20 fast food minimum wage.
Researchers found that businesses are adjusting by cutting shifts, raising menu prices, and increasingly turning to automation such as self-service kiosks and mobile ordering systems.
The findings echo concerns from a report FOX26 did in 2025, when similar questions emerged about whether the wage increase was helping or hurting workers.
Now, the latest data indicates those trends may be continuing statewide.
Tom Manzo, founder of the California Business and Industrial Alliance, says the impact on the industry is difficult to ignore.
“You can’t deny what’s happening to this industry,” Manzo said. “Places are closing, big chains are closing, people are getting laid off.”
The University of California, Santa Cruz study found that although higher wages have attracted more applicants, the number of available positions has not kept pace.
In one case study cited in the report, a McDonald’s franchise owner operating 18 locations in California’s Central Valley saw employee hours drop by more than 11.5% after the wage law took effect, equivalent to roughly 62 full-time jobs.
Researchers say similar patterns may be occurring across the state based on two years of data.
The study also found that some restaurants are adjusting operating hours by opening later and closing earlier to manage rising costs.
Smaller, family-owned establishments, even those not required to pay the $20 minimum, are reportedly facing indirect pressure to raise wages while dealing with tighter profit margins.
However, not all research agrees with these conclusions.
A separate study conducted in September 2024 by the UC Berkeley Institute for Research on Labor and Employment found that the wage increase boosted worker pay without causing job losses, and that price increases for consumers were minimal.
The author of that study defended its findings in a statement, saying the research relied on objective data and accounted for seasonal trends. An updated version of the Berkeley study is expected soon, and is anticipated to reinforce its earlier conclusions.