Experts have mixed views of California fast food jobs data

Recently released employment data touted by California Gov. Gavin Newsom shows the state’s fast food industry continues to add jobs, even after the $20 minimum wage law was implemented. Experts, however, have differing views of the data.

In August, Newsom said quick-service restaurants had consistently added new jobs every month so far this year, reaching a record of 750,500 jobs in July, according to preliminary data from the U.S. Bureau of Labor Statistics. The data also shows that 11,000 jobs have been added since April, when the controversial fast food minimum wage law took effect.

“What’s good for workers is good for business, and as California’s fast food industry continues booming every single month, our workers are finally getting the pay they deserve. Despite those who pedaled lies about how this would doom the industry, California’s economy and workers are again proving them wrong.” Newsom said in a statement.

However, Rebecca Paxton, director of Research at Employment Policies Institute, told KTLA that the data Newsom referred to doesn’t tell the whole story.

“So, the governor is saying that the data shows California has the highest fast food employment it’s ever had. Unfortunately, he’s using a preliminary data set released by the Bureau of Labor Statistics. The latest set that the Bureau of Labor Statistics releases is called seasonally adjusted, which is what economists use to measure policy impacts. And if you look at that data set, it shows that since January, fast food jobs in California are down by roughly 3,000,” Paxton told KTLA.

Paxton explained that the Bureau of Labor Statistics releases two data sets: one non-seasonally adjusted and the other seasonally adjusted. The seasonally adjusted data sets account for seasonal factors, like seasonal hiring, policy impacts, or recessions, which the non-seasonally adjusted dataset doesn’t.

In the months leading up to the official implementation of the fast food minimum wage law, multiple news organizations reported on businesses that decided either to decrease their labor force or close altogether . Some cited concerns over being able to pay employees the new minimum wage, while others said their decision was due to the rising costs of doing business in California.

Paxton noted that while the seasonally adjusted dataset is more accurate for economists, it still doesn’t account for nuances such as an employee’s work hours being reduced.

“One thing that is not included in either of these data sets is a net change. So, it’s not measuring the number of folks who have lost their jobs, gained their jobs, or turnover. It’s also not measuring folks that have been like reduced. They’re still employed, but their hours have been reduced,” Paxton explained.

A study from the Employment Policies Institute says 89% of California fast-food employees experienced reduced hours at their jobs between April and May.

Even so, John Logan, director of Labor and Employment Studies at San Francisco State University, told KTLA that job creation within this sector of the economy is good for workers.

“A lot of people on the industry side and conservative economists predicted that this would be a huge job killer, that the industry would stop adding the number of jobs that it has done over the past decade, that companies would close, they would lay off workers, they would reduce hours, they would replace workers with automation, etc.,” Logan told KTLA.

“We have figures from April that indicate that 11,000 jobs were created since the new law came into effect. So, what that means is that these catastrophically dire predictions about the bill being a job destroyer have not come to pass. On the surface, this is good news for the governor, unions and people who supported the legislation.”

Logan did note that it wasn’t surprising to see that more jobs were added in the months leading up to summer since that’s typically when more jobs, specifically seasonal, are created,

He also noted that while some jobs have been created since the minimum wage bump, others have been lost. Still, he stressed that the job loss wasn’t as bad as some opponents had predicted.

“It tends to be that if fast food workers are being paid poverty wages, even though they work for companies that are billion-dollar corporations, it’s the state that ends up footing the bill. The state has to pay more in terms of benefits given to full-time working people who are earning below the poverty line for subsidized Medicaid, subsidized food, housing, subsidizing food benefits, etc” Logan said.

“So, it’s actually the taxpayers of California that end up sort of essentially paying corporate welfare to these multi-billion-dollar fast food corporations. The fact that the companies can afford it and are now being required to afford it, which is to pay a higher basic minimum wage – it’s a good thing. $20 an hour is an improvement. It is a big raise for a lot of workers, but it’s still quite low.”

Despite the mixed messages from policymakers and experts on this, members of the California Fast Food Workers Union, a branch of the Service Employees International Union (SEIU), have asked for another wage increase of $20.70 per hour to be implemented by Jan. 1, 2025.

“As California’s fast-food industry grows, cooks and cashiers are doubling down on their fight across the state to win safe and healthy stores, stable hours, pay that keeps up with inflation and training to understand their rights on the job,” a memo sent to KTLA said.

However, according to Paxton, now is not the time for another wage increase.

“We certainly think there needs to be more time spent talking to folks impacted by this. How does this affect their operations, employees, and residents? We’re seeing all over the place that restaurants are increasing their prices. We’ve seen reports of employees saying, well, they’re laid off or working fewer hours, so I can’t afford to go to these restaurants that are now upping their prices. So, it’s affecting the employees themselves. I think we still need to let this play out.” Paxton said.

Logan believes that other states will continue to closely watch California to see if the fast food minimum wage law is successful. If it is, residents in other states may see similar policies implemented.

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