California's $20 fast-food minimum wage improves pay at small cost to consumers
74 comments
·April 26, 2025georgeburdell
ec109685
Chick-fil-A raised their prices everywhere, so it can’t just be because of this law:
“That's right: A year ago, in January of 2023, Chick-fil-A implemented a 6% price increase on all menu items. The previous year, their signature sandwich increased in price by 15%. That means your favorite chicken sandwich is now significantly pricier than it was just two years ago”
dismalaf
Compare restaurant price increases over the last 20 years to that of the overall economy. Or especially to something like housing.
Restaurants are currently incredibly cheap.
crooked-v
That's a bad comparison because the much more important factor is that housing is incredibly and disproportionately expensive right now, not becuase that's the 'natural' state of the economy, but because almost every major US city has made it expensive to build housing and impossible to build middle-density housing.
Or in other words, your 'cheapness' comparison is only against a self-inflicted artifical high point.
kilroy123
To be fair, In-N-Out is an outlier. Privately owned, non-franchised, and probably makes a profit on massive volume with likely very small margins.
pants2
In N Out also has the smallest menu of any fast-food joint and has a very vertically integrated supply chain: They own their own meat production plants, cut their own potatoes into fries, operate their own bakeries etc.
bbarnett
McDonalds? Low pricing?!?!
georgeburdell
I avoid their trademarked items, such as the Big Mac, but even in California they have a robust value menu
dymk
If you're savvy to the price discrimination. You have to use the app to get the lower prices.
Loughla
That's so ridiculous. The reason we would get McDonald's when we would get it was that it was fast, and cheap.
Now it's neither unless I give them access to my smartphone. No thank you.
dawnerd
Right they’re the most expensive fast food around me. They even got rid of their semi secret deals.
changoplatanero
Hmm I saw a different analysis recently indicating that there was a large reduction in fast food jobs in California after the raise to $20/hr. Which one is right?
ec109685
The first studies that came out failed to adjust for seasonality.
“Here’s the problem with that figure: It’s derived from a government statistic that is not seasonally adjusted. That’s crucial when tracking jobs in seasonal industries, such as restaurants, because their business and consequently employment fluctuate in predictable patterns through the year. For this reason, economists vastly prefer seasonally adjusted figures when plotting out employment trend lines in those industries.”
https://www.latimes.com/business/story/2024-06-12/the-fast-f...
Frieren
Share your other analysts so we can take a look.
greenchair
slater
Those tables seem a bit... odd? Are we led to believe that between January and February, no fast food restaurants closed? Not a single one? And same for July and August?
Also, a gold star for prominently featuring the totals cumulatively, oooo scary number go up! I did the needful:
addoo
Unimportant detail: The prices in the image in the article are 48% lower than the prices at my local California In-n-Out.
digianarchist
That image is 11 years old
knowitnone
it is manipulative to show a picture that is not contexual. Would it be too hard to get a recent picture with recent prices?
vondur
I wouldn't call it a "small cost." Most fast food meals are at least $15 now. McDonald's just opened a new location here — no dine-in or counter service at all. It's partly because of crime, but also because they don’t need to hire as many people to maintain a dining area. On the bright side, I guess I’m eating out a lot less now.
toomuchtodo
Price went up ~1.5%. That is objectively a small cost.
> While menu prices did increase, costs rose by an average of just 1.5% –equivalent to about 6 cents on a $4 hamburger, down from the 15-cent increase reported in the September study.
McDonald's gross profit for the twelve months ending December 31, 2024 was $14.710B.
https://corporate.mcdonalds.com/corpmcd/our-stories/article/...
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sunshinerag
Why $20? Why not 50$
vishalontheline
At $20, you'd earn a roughly $40k salary if you were to work full-time. That won't buy you a house, but it will let you rent a room in a house within commuting distance from your place of work, maybe drive an old beater Camry, cook your own food, and have some money saved up for school.
Why not $50, that's a $100k salary - most people would be opposed to it because you'd be able to potentially afford much more than what they perceive a fast food worker should be able to afford.
bigtex
Do we have logic behind why they chose $20 and not $50?
nine_k
You pay $7 for a burger now? Why not $15?
I mean, if the customers won't mind, and agreed to pay much more, the wages could also grow much more.
greenchair
Yeah, no. My restaurant owner friend said during <he who shall not be named> crazy inflation when complaining about skyrocketing food costs: "theres only so much money people are willing to spend for a salad".
Also why is axios' article format so demeaning? The info is presented like it is written for 3rd graders.
aaronbrethorst
The axios format is called “smart brevity” and it makes me so frustrated. https://www.axios.com/smart-brevity
hnburnsy
Here is a better article with competing studies...
https://calmatters.org/commentary/2025/02/fast-food-minimum-...
>On Tuesday, the industry released its own impact study, conducted by the Berkeley Research Group, a private consulting firm. It found that wage increases have reduced fast food employment, shortened the hours worked, compelled fast food franchises to use more automation and resulted in markedly higher consumer prices.
standardUser
An industry report by a private consulting firm that overwhelmingly supports the position of the industry funding the report is not fascinating to me. It's obligatory propaganda. The absence of it would be fascinating.
hnburnsy
Do you think the "Institute for Research on Labor and Employment" at Berkley is without biases? I would argue that the Berkley study showing positive results is flawed on wage evaluation as it uses data from Glassdoor. IMO, Glassdoor is not reliable.
standardUser
> Do you think the "Institute for Research on Labor and Employment" at Berkley is without biases?
No, did I state or imply that? A private organization was paid by an industry to produce a report, and that report overwhelming supports the industry that paid for the report. How do weigh such data in your own decision-making? I give data from a public university, produced by individuals we could email right now if we wanted, individuals who presumably have reputations and career trajectories, a pretty hefty weight. Not above suspicion and not devoid of bias, but worth parsing. Is an industry report, by the industry for the industry, really worth parsing to you?
free_bip
Any study done by an industry, for said industry, is necessarily rife with large, obvious conflicts of interest. It's barely worth considering.
db48x
If you think the study has flaws, point them out. Otherwise your argument is just ad hominem.
free_bip
Are you aware of the storied history of companies outright faking data in industry "studies"? Here's a good introduction: https://pmc.ncbi.nlm.nih.gov/articles/PMC9263403/
MilnerRoute
The linked-to article actually starts with the case for the wage increase. (The HN comment only quotes the one industry-funded study, which appears much further down.) From the article:
"We find that the policy increased average hourly pay by a remarkable 18 percent, and yet it did not reduce employment,” a study by the UC Berkeley Institute for Research and Labor Employment concluded. “The policy increased prices about 3.7 percent, or about 15 cents on a $4 hamburger (on a one-time basis), contrary to industry claims of larger increases."
This is one of those situations where everyone seems to see what they want to see. (The article notes that "Both pro and con studies used roughly the same employment data generated by the federal Bureau of Labor Statistics. The agency does not collect specific data on the fast food chains affected by the minimum wage legislation, so the rival researchers had to extrapolate what they contend are valid statistical bases... without some reliable data on effects, everyone involved is shooting in the dark. It will be politics, rather than fact, which governs the outcomes.")
Spooky23
Well obviously a study funded by the industry has zero value. They conclude what they are paid to.
The industry does price segmentation now, so it’s hard to measure the prices anyway. If you order two egg McMuffins and two coffees at the counter in my city, it’s $13. With the app… $8.
Im in California a few times a year. The prices if different are very marginally so.
Rebelgecko
The McDonalds I've been to in California don't even have a person to take your order any more (small sample size fwiw). Is that universal now?
ec109685
Did the study compare automation and hours worked between franchises across states?
E.g. if California restaurants automated, but Texas ones did not, then you can attribute it to policy differences. Otherwise, it’s just guessing why restaurants took these measures.
JumpCrisscross
Do you have a link to the industry study? I don't have a personal Dropbox [1] and don't want to use my work login.
[1] https://www.dropbox.com/scl/fi/qwllx1iv8q1ecudz6z59v/BRG_Imp...
yellowapple
In what way is that article "better"?
zeroonetwothree
It reports on the potential bias of studies and mentions there are multiple rival ones?
mindslight
> wage increases have reduced fast food employment, shortened the hours worked, compelled fast food franchises to use more automation
This sounds like all around progress to me. As always, the trick is getting the political will to take care of those displaced by progress rather than stiffing them with hard knocks until their resentment builds into support for more destructive policies like the current Great Leap Backwards.
twoodfin
Historically, it’s more efficient and less of a constraint on growth to take care of those people directly via transfer payments (tax & spend) than by turning over otherwise ordinary business decisions to bureaucracy like the “California Fast Food Council”.
giraffe_lady
> It found that wage increases have reduced fast food employment, shortened the hours worked, compelled fast food franchises to use more automation
The wage increase is the agent here? More correct to say that owners did these things in response.
qcic
Potato - potato. Doesn’t really matter that it was a response, the chain of events is still the same, so are the results. It the end of the day, just one more example of unintended consequences of legislation.
Spooky23
Labor is just one part of it. Increasing the wage 15% at worst pulled forward the transition to automation.
Automating the order flow avoids even higher wages for good English speakers and kiosks drive higher margin via up sales. Automation of drink pouring reduces shrink. Eliminating cash reduces cash handling expenses and reduces refunds.
I have a friend who owns a few McDonalds in a high expense state. He bitches about marketing expense share and supply cost.
yellowapple
> the chain of events is still the same
Ignoring the link in that chain wherein corporations chose to take various unnecessary and punative measures as retaliation against having to pay their workers more is intellectually dishonest, at best.
pbh101
One is a trigger to an otherwise steady-state dynamic system. I don’t think unreasonable to ask what effect a policy change had, net all the choices each agent has and takes in response to the change.
Justin_K
People said the same when factory automation came about. Wouldn't you agree that it's silly to pay a human to press the buttons you verbalize?
Difwif
It's a completely unsurprising cause and effect. What other outcome would you expect?
This is a business functioning as it should.
kgwxd
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testing22321
Yes of course, but profits are lower.
And if there is anything more taboo than sex on tv in the US, it’s reducing profits.
qcic
Please, tell me which part of the world has higher minimum wage and lower prices. I dare you.
ajross
No? $20US/hour is higher than any national wage floor currently, wikipedia unsurprisingly has a great list at https://en.wikipedia.org/wiki/List_of_countries_by_minimum_w...
Even in PPP units (which subsumes both your points) California beats everyone in that list but Argentina (which has some kind of craziness in its PPP scaling I don't understand). The next closest is the Netherlands at ~$17.
I mean, it really shouldn't be surprising to point out that California is really fucking wealthy.
yellowapple
I wonder if that changes if you factor in the value of public services people receive? I'm sure the Dutch have better government programs w.r.t. healthcare and other essential services than we Americans do.
ajross
PPP includes a lot of that, but not healthcare (the analysis for which is really complicated because it's not like you just pay one number and add it up, outcome curves matter, etc...). A closer number is "disposable income", which is the money a household has leftover after essentials. But that can't be measured with a hourly wage number, and AFAIK no one has tried to measure it specifically for "fast food workers in California", the numbers you see tend to be for medians, so somewhat higher up the scale.
But yes: the USA does really well on disposable income metrics too. It's not popuular to point out given all our recurrent shitstorms, but in fact Americans are, yeah, really fucking wealthy.
theklahomate
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robomartin
This article is a complete fabrication. Jobs have been lost. Businesses have seen a reduction in sales due to having to raise prices. People don't tip at all now or tip very little. Full time jobs are shifted to be part time. Etc.
As is always the case with these policies, the people who were promised better outcomes are the ones who suffer. Everything is more expensive. On top of that, CA has a fetish with taxation, which means your $20 per hour likely has the buying power you had when you were earning $10, if not less. We pay nearly $5 per gallon for gasoline when, in other parts of the nation the prices are around $2.50. It's all taxes and over-regulation. Insurance (car and home) is crazy expensive. Everything is expensive.
I am not sure how far we are from what I've been calling a "Javier Milei" moment in CA. The moment when the population finally suffered enough to understand reality and put people in office who will actually do what they are supposed to do.
New one: They are pushing for a mileage tax on vehicles. The excuse is that revenues have come down due to electrics. This is a lie. Only about 5% of the vehicles in CA are EV's. Furthermore, the road maintenance taxes we pay on fuel have AUTOMATIC annual increases built in. And yet, I have been to third world countries who's road are better maintained than in CA. It's truly embarrassing and criminal. The money is being diverted to things other than road maintenance.
In short, this article is completely disconnected to reality on the ground.
robomartin
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llmguy
2 things can be true
1) Investors might earn too much return on their investment and wage inequality is high.
2) This study ignores downstream effects that result from the lower returns for ongoing/new investment. Since they’re now paying more for labor and selling less, new investment and upkeep has a lower return. Less store upgrades less new restaurants less expansion and so on. In the short term though, of course wage growth (inflation) feels good.
hayst4ck
I don't accept this at face value. I'm open to this line of reasoning, but can you prove it or provide evidence that there's something to it?
I also think there is a counter point that now fast food laborers have more money to spend on fast food or other businesses that provide goods or services that help grow the economy.
The more I think about it, the more it sounds like you are defending trickle down economics, which is literally a turd of a theory... It's other name is Horse and Sparrow economics. If the horse eats enough oats, then sparrows can survive of its droppings.
llmguy
I think if you're looking for proof you're setting too high a standard. But Seattle's experiment hasn't gone well AFAIK. Higher wages = less hours to go around = less money, less economic output, less investment, and so on.
https://evans.uw.edu/faculty-research/the-minimum-wage-study... https://www.aeaweb.org/articles?id=10.1257/pol.20180578
"Relative to outlying regions of the state identified by the synthetic control method, aggregate employment at wages less than twice the original minimum—measured by total hours worked—declined."
On the other hand, taxing restaraunts with unhealthy food and forcing that money to go to low income workers maybe isn't so bad. I think NYC taxes soda directly for instance. Imagine if they forced that money to go to workers.
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The fast food chains seem to have a bifurcated response. Some, like McDonalds, seem to have cut crew, while retaining relatively low prices, so service is generally quite poor now. Others, such as Chick-fil-A, raised their prices, and a plain chicken sandwich at my local franchise is now about $7.
Edit: In-N-Out Burger is the only one I can think of with low prices and good staffing. It is also privately owned