Thousands More Fired Following Newsom’s $20 Minimum Wage Hike

By: David Donovan | Last updated: Jul 01, 2024

Since Gov. Gavin Newsom increased the state’s minimum wage to $20, thousands of people have lost their jobs and have been forced to pay inflated menu prices. 

This has had a significant impact on the fast-food industry in California as workers bear the brunt of the fallout.

$20 Minimum Wage Was a Compromise

While the $20 minimum wage may seem like a massive jump compared to what it was before, this was actually a compromise, with the initial number being $22.

A $1 note with copper and silver coins on top.

Kenny Eliason/Unsplash

The current rise is 25% from $16 per hour, with the $22 rejected by businesses who made the compelling case that they wouldn’t be able to cope with such a sudden increase.


Only Fast Food Chains Are Affected

Not all fast food restaurants are said to be affected by the minimum wage increase, as only those who have 60 or more restaurants across the US will have to pay the increase.

The inside of a Chick-fil-A restaurant with digital menus behind the kiosk.

Zoshua Colah/Unsplash

There was some concern beforehand that most small businesses would struggle with this increase, but they seem not to be affected by it.

The Compassionate Legislation Isn’t Very Compassionate

The whole point of not increasing the minimum wage by as much as was previously propositioned was so that it would be a bit more compassionate towards businesses.

A $1 note on a brown wooden table.

Kenny Eliason/Unsplash

It was also done so fast food workers could have more money to afford the basic necessities. However, as many of these workers are now losing their jobs due to this increase, there are some questions as to how compassionate this supposed compassionate legislation actually is.

Hopes a Raise Will Increase Number of Employees

One of the main hopes of this new legislation was that it would encourage more people to go and work in the fast food industry if it had the highest minimum wage across various industries and the rest of the US.

A pile of $1, $20, and $100 notes.

Blogging Guide/Unsplash

But as people are seeing mass layoffs as a result of this increase, no one wants to even apply for jobs in the industry because they fear getting fired as soon as they are hired.


The California Business and Industrial Alliance (CABIA) President Tom Manzo explained why organizations are “fed up” with California’s policies during “Fox and Friends”. 

pizza on white ceramic plate with other fast food items, drinks and salad.

Meanwhile, Americans struggle to bear the cost of the product that is presently thought to be a “luxury item” by certain shoppers.


Manzo’s Opinion

“The biggest issue California faces is continued increased cost and a continued anti-business climate,” according to Manzo. 

fried chicken on paper bag, there are tongs reaching for the fried chicken

Unsplash user Brian Chan

He went on to say: “That’s why we decided to run this ad in the first place, and… business owners are fed up… Quite frankly, it’s having a ripple effect now on everybody.”


Mass Layoffs

CABIA said almost 10,000 positions have been cut across fast food eateries since Newsom introduced California Assembly Bill 1228 into law last year. 

burger with fries on a wooden surface

Unsplash user Jonathan Borba

CABIA has published an advertisement with mock “obituaries” of popular fast food brands in Thursday’s statewide edition of USA Today to highlight what it claims are the law’s unintended consequences.


Workers Laid off Before the Increase

Despite the new minimum wage increase not coming into effect until April 1, 2024, some businesses had begun laying off workers long before this.

The inside of a Chick-fil-A restaurant, with two customers by the kiosk to order.

Zoshua Colah/Unsplash

This was done because it had been predicted that the new increase would be tough for businesses and would only result in mass layoffs and price increases. Some employees found out they were going to be losing their jobs towards the end of 2023.


Pizza Hut Cuts 1200 Jobs

One restaurant that has already started laying off workers is Pizza Hut. In December 2023, around 1,200 delivery driver jobs were cut, and other franchises announced they were eliminating their delivery services entirely.

A Pizza Hut wrapper with the Pizza Hut logo on.

Mishaal Zahed/Unsplash

Pizza Hut hopes that the delivery experience remains the same for its customers, but it’s not good news for those who have lost their jobs or those living in areas where deliveries will be affected.


Spreading Awareness

CABIA’s promotion features various eateries that have needed to raise costs and lay off laborers to remain above water and, at times, shut down stores. 

Fries coming out of a paper Burger King packet

The promotion highlights news clips recording changes made by brands like El Pollo Loco, Subway, and Burger King across the state.


Restaurants Relying on Robots

As they are having to reduce their human staff, many fast food restaurants have since decided to start relying on robots instead.

Three stuffed quesadillas on a white plate with a pot of red sauce next to it.


As they don’t have to pay them wages, it should theoretically work out cheaper in the long run. El Pollo Loco and Jack in the Box are two restaurants that plan on doing this, including using them to prepare salsa and cook fried foods.


Automation Is Increasing

Many fast food restaurants are also planning on increasing their reliance on automation to help them cut back on staff.

A digital kiosk at McDonald's.


This means eliminating staffed kiosks and relying only on kitchen staff to prepare and cook the food.


Need for Change

“That’s why we continue to advocate because legislators, the governor, they need to wake up,” Manzo said. “You cannot be this anti-business.”

burger sandwich and potato fries on brown wooden surface with two dips

Unsplash user Pixzolo Photography

“We’re going to continue to fight,” he continued. “We advocate for small to medium-sized businesses, people that don’t have a voice… We need to change the direct trajectory, and that’s what we’re going to do. That’s our mission.”


Newsom’s Rebuttal

The CABIA’s claims that there would be a loss of fast-food jobs were disputed by Newsom’s office. 

Gavin Newsom with President Biden while Secret Service and other aides are in the background.

X user GavinNewsom

According to the governor’s spokesperson, the U.S. Bureau of Labor Statistics showed that limited-service restaurants added 4,500 jobs in California between September 2023 and April 1, and from April 2023 to April 1, 6,600 new fast food jobs were created.


Luxury Expense

Due to high prices, nearly eighty percent of Americans now consider fast food to be a “luxury” expense. 

fried chicken with salad, fries and dips on brown wooden round plate

Unsplash user Farhad Ibrahimzade

Menu prices have also increased due to the wage increase. 68 % of respondents to a survey conducted by LendingTree agree that the prices of fast food items are excessive.


Fast Food Shouldn’t Be a Luxury

Fast food has long been the quick and easy option for people, with the bonus being that it is cheap. Or at least it used to be.

A person taking a slice of ham and cheese pizza.

Muffin Creatives/Pexels

But now it is seen as a luxury item, California business leaders have said that this shouldn’t be the case and that changes need to be made so that fast food can go back to being cheap.


Fast Food Traffic at an All Time Low

One of the other issues fast food restaurants are having is that the footfall since the April minimum wage hike has gone down significantly.

Two burgers in wrappers and a portion of fries.

Kristina Paukshtite/Pexels

Compared to other fast food restaurants throughout the rest of the US, California’s outlets are struggling the most. The reason seems to point towards the $20 minimum wage increase.


Customers Are Also Losing Out

It’s not just the workers who are losing out; customers are also at a loss due to the price increases of their favorite fast food places as a result of the minimum wage increase.

Two cheeseburgers, a portion of fries, and two drinks in a box.

Caleb Oquendo/Pexels

Chipotle has said it will be increasing its prices by as much as 18%, meaning customers are less likely to walk through its doors as they can no longer afford the price increases on top of everything else.


Minimum Wage Concerns

During “Fox & Friends First,” Restaurant Business Magazine editor-in-chief Jonathan Maze refuted the notion that the minimum wage increase benefits workers, citing concerns regarding the timing and severity of the increase.

sandwich and fries on tray with other fried food and a coca cola

Unsplash user Khalid Boutchich

Maze stated, “It’s a tough thing to do. You got two issues. You have the fact that it was done almost overnight. You have the fact that it was a 25% increase in the wage rate. Both of those things, happening simultaneously, is a really hard thing for restaurants”


California Workers Want $30 Wage Increase

While businesses are struggling and some leaders are saying the $20 minimum wage increase needs to go down, California workers are asking for their wage to be raised to $30.

A person holding dollar notes that are fanned out.

Alexander Grey/Unsplash

As many workers are struggling to afford the basic cost of living, an increase to $30 would be great for them; however, it would hurt businesses financially and could also lead to more layoffs.


Affordable Reputation

That’s what Maze contended because costs have inflated, and Americans are eating out once in a while compared to before as it keeps on influencing the business’ “reputation” as a cheaper choice for everyday families.

Exterior of McDonald’s at night time with cars parked outside and lights on.

Unsplash user Shahbaz Ali

Maze stated, “This has been a challenging environment. If you looked at what McDonald’s had reported just a couple of weeks ago, their prices are up 40% since 2019.”


Maze’s Interpretation

According to Maze: “Their costs are up since 2019. You had, right after the pandemic… a dramatic increase in food costs. You had a dramatic increase in labor costs.”

fries and burger on white ceramic plate with salad and slaw to the side and fried chicken.

Unsplash user Mustafa Bashari

He went on to say, “Insurance costs are up. Lending rates are up. Everything costs a lot more. Construction costs are up, and that requires companies to increase prices.”


Hiring Freeze

Now that companies are struggling to pay their employees many fast-food companies have placed a hiring freeze and have announced mass layoffs.

burger with cheese and vegetable on a stainless steel tray with fries as a hand dips a fry in sauce

Along with a high tax and cost of living the latest in government policies is putting a strain on businesses.

In increasing the minimum wage Newsom has caused division amongst political commentators who struggle to see the rhetoric in causing such a dramatic shift.