The standard prediction is that a higher minimum wage reduces employment among low-wage workers. This column examines the effect of a rise in the minimum wage in California for workers at both large and small fast-food chains. Among smaller chains, employment, the number of establishments, and openings fell, while closures rose. The largest chains remained unchanged, indicating that the policy shifted California’s fast-food market towards its largest chains.
In 2024, California raised the minimum wage for workers at fast-food chains with more than 60 locations nationwide to $20 an hour, $4 above the statewide minimum wage at the time. Other sector-specific minimum wages already exist or are under consideration. For example, Los Angeles hotels and airports are heading to $30 an hour (Claire 2026), California’s health-care workers got another raise in June 2026 (California Medical Association 2026), and Vermont is weighing its $20 fast-food wage (Abou 2026).
On the question of whether the $20 minimum wage reduced fast-food employment, existing studies reach different conclusions. Clemens et al. (2025) find fast-food employment fell 2.3% to 3.9% relative to other states, and Pandit (2026) finds staffing fell about 8%. In contrast, Sosinskiy and Reich (2026) find small, insignificant declines, and Dube (2026) finds effects that range from slightly negative to slightly positive.
Our research does not attempt to resolve these differences. Instead, we turn to a more reliable data source – an establishment-level dataset that can identify which businesses the law actually covers and that allows us to examine the margins through which employers adjusted, including employment at continuing locations, openings and closures, and whether the largest chains responded differently from smaller ones. We do find evidence of adverse effects, but they are concentrated among the smaller chains covered by the law.
Continue reading at the Centre for Economic Policy Research.
Vitor Melo, PhD, is a Regulatory Policy Fellow at the Archbridge Institute and host of “The Cause and Effect,”“ a multimedia channel that translates academic research into clear insights for policymakers and the public. His research examines how labor regulations shape economic opportunity. Dr. Melo received his Ph.D. in economics from Clemson University.
Gary A. Wagner
Gary A. Wagner, PhD, currently holds the Acadiana Business Economist/BORSF Eminent Scholar Endowed Chair at the University of Louisiana at Lafayette. His research interests range from regional economics to state and local public finance issues, with a particular focus on tax structures and economic development. He has authored or coauthored more than 60 professional articles and reports and has delivered more than 400 presentations to public audiences on national and regional economic conditions. Dr. Wagner served on the Governor's Council of Economic Advisors in Arkansas from 2008-2011, and he is a quarterly participant in the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters projecting national economic conditions. Dr. Wagner’s professional research has appeared in many economics journals including the Research Policy, Journal of Business Venturing, Journal of Urban Economics, Journal of Law and Economics, Journal of Economic Behavior and Organization, National Tax Journal, Economics and Politics, and Regional Science and Urban Economics. He is also editor-in-chief of Public Finance Review, co-editor of Contemporary Economic Policy, and a research fellow at the Federal Deposit Insurance Corporation's Center for Financial Research. Dr. Wagner holds a Ph.D. in economics from West Virginia University.
Economics of Flourishing
The standard prediction is that a higher minimum wage reduces employment among low-wage workers. This column examines the effect of a rise in the minimum wage in California for workers at both large and small fast-food chains. Among smaller chains, employment, the number of establishments, and openings fell, while closures rose. The largest chains remained unchanged, indicating that the policy shifted California’s fast-food market towards its largest chains.
In 2024, California raised the minimum wage for workers at fast-food chains with more than 60 locations nationwide to $20 an hour, $4 above the statewide minimum wage at the time. Other sector-specific minimum wages already exist or are under consideration. For example, Los Angeles hotels and airports are heading to $30 an hour (Claire 2026), California’s health-care workers got another raise in June 2026 (California Medical Association 2026), and Vermont is weighing its $20 fast-food wage (Abou 2026).
On the question of whether the $20 minimum wage reduced fast-food employment, existing studies reach different conclusions. Clemens et al. (2025) find fast-food employment fell 2.3% to 3.9% relative to other states, and Pandit (2026) finds staffing fell about 8%. In contrast, Sosinskiy and Reich (2026) find small, insignificant declines, and Dube (2026) finds effects that range from slightly negative to slightly positive.
Our research does not attempt to resolve these differences. Instead, we turn to a more reliable data source – an establishment-level dataset that can identify which businesses the law actually covers and that allows us to examine the margins through which employers adjusted, including employment at continuing locations, openings and closures, and whether the largest chains responded differently from smaller ones. We do find evidence of adverse effects, but they are concentrated among the smaller chains covered by the law.
Continue reading at the Centre for Economic Policy Research.
Vitor Melo
Vitor Melo, PhD, is a Regulatory Policy Fellow at the Archbridge Institute and host of “The Cause and Effect,”“ a multimedia channel that translates academic research into clear insights for policymakers and the public. His research examines how labor regulations shape economic opportunity. Dr. Melo received his Ph.D. in economics from Clemson University.
Gary A. Wagner
Gary A. Wagner, PhD, currently holds the Acadiana Business Economist/BORSF Eminent Scholar Endowed Chair at the University of Louisiana at Lafayette. His research interests range from regional economics to state and local public finance issues, with a particular focus on tax structures and economic development. He has authored or coauthored more than 60 professional articles and reports and has delivered more than 400 presentations to public audiences on national and regional economic conditions. Dr. Wagner served on the Governor's Council of Economic Advisors in Arkansas from 2008-2011, and he is a quarterly participant in the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters projecting national economic conditions. Dr. Wagner’s professional research has appeared in many economics journals including the Research Policy, Journal of Business Venturing, Journal of Urban Economics, Journal of Law and Economics, Journal of Economic Behavior and Organization, National Tax Journal, Economics and Politics, and Regional Science and Urban Economics. He is also editor-in-chief of Public Finance Review, co-editor of Contemporary Economic Policy, and a research fellow at the Federal Deposit Insurance Corporation's Center for Financial Research. Dr. Wagner holds a Ph.D. in economics from West Virginia University.
David Neumark
Liam Siguad
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