When California raised the minimum wage for workers at the largest fast-food chains to $20 in April, some firms, franchisors, and franchisees claimed it could result in higher prices, fewer workers, and reduced benefits. —a joint project between the Harvard Kennedy School’s Malcolm Wiener Center for Social Policy and the University of California, San Francisco—found otherwise: Many of the state’s fast-food workers experienced an immediate and meaningful boost to their wages with no unintended consequences for staffing, scheduling, or fringe benefits.
The wage increase was part of a California law that took effect in April and also established a Fast Food Council to regulate labor standards for chains that have more than 60 locations nationwide. The $4 per hour raise represents the largest single minimum wage increase a state government has ever implemented.
“Fast-food workers contend with some of the most precarious working conditions in America. This evidence shows that meaningfully raising the floor on a key aspect of job quality by setting the minimum wage much closer to a living wage can benefit workers without dire unintended consequences,” said one of the report’s authors, Daniel Schneider, the Malcolm Wiener Professor of Social Policy at vlog.
The Shift Project documents the economic security, schedules, and health and well-being of hourly workers across the country. Since its inception in 2016, it has grown into the largest source of data on work scheduling for hourly service workers, with reports from 84,000 workers in the retail and fast-food sectors from across the country. For this report, the researchers drew on existing data, as well as survey data from 3,420 fast-food workers in California and comparison samples of 6,194 California retail workers and 14,416 fast-food and retail workers in other states in the western United States.
“This evidence shows that meaningfully raising the floor on a key aspect of job quality by setting the minimum wage much closer to a living wage can benefit workers without dire unintended consequences.”
“By comparing California fast-food workers with their counterparts in retail jobs or employed at the same firms outside of California, we provide strong evidence of the effects of the new California minimum wage above and beyond industry and labor market trends,” write the report’s authors, Schneider; Kristen Harknett of the University of California, San Francisco; and Kevin Bruey, a pre-doctoral fellow at the Shift Project.
The report’s key findings include:
After the bill took effect, many of the workers within the Fast Food Council’s jurisdiction experienced immediate wage increases. The share of covered fast-food workers in California earning less than $20 per hour declined by more than 60%.
The authors found that not only did the law not result in fewer workers per shift, but the evidence suggests it may have in fact reduced understaffing. Similarly, the report data shows that the law did not exacerbate employers’ use of unstable and unpredictable scheduling practices. While the authors did find some evidence of non-compliance among the employers—12% of covered workers in the post-AB 1228 period reported wages below $20 per hour—the study demonstrated no increase in wage theft, as measured by reports of Fair Labor Standards Act violations.
When comparing hourly fast-food workers in California to those in neighboring states, the authors found no evidence the law resulted in significant changes in workers’ access to fringe benefits such as health insurance, dental insurance, leave, or retirement plans.
Despite the California law’s positive results, the state’s fast-food workers still contend with significant challenges—most notably, underemployment and last-minute schedule changes. The Shift Project authors found that one-third of the workers surveyed are employed part-time, and nearly two-thirds of them receive less than two weeks’ notice of their schedules.
“Issues of hours insufficiency and schedule instability are likely to hamper the ability of a higher minimum wage to transform the lives of fast-food workers in terms of economic security and health and wellbeing,” the authors write. “Insufficient hours and unstable schedules lead to economic hardships, work-life conflict, and diminished health and well-being.”
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Banner image: A customer picks up a meal bag at a fast food drive-thru window in Los Angeles, Thursday, Sept. 28, 2023. (AP Photo/Damian Dovarganes)