California Governor Gavin Newsom once described the state’s $20 minimum wage for fast-food workers as a “win-win-win.”

Two years later, the policy’s impact has proved far more complicated, as restaurants across the state grapple with rising costs and closures linked to the wage increase.

The FAST Recovery Act, which took effect in 2023, was promoted by Newsom, seen as a likely 2028 Democratic presidential contender, as a landmark achievement benefiting workers, business owners, and customers alike.

Since then, however, the law has coincided with widespread layoffs, restaurant closures, and price increases across the Golden State.

Data from the Employment Policies Institute indicate the state has lost nearly 20,000 fast-food jobs since the legislation was signed — accounting for roughly one-quarter of all fast-food job losses nationwide during that period.

Two Pizza Hut franchise operators have laid off more than 1,200 delivery drivers, citing increased labor costs tied to the wage hike. Other chains, including Mod Pizza and Foster’s Freeze, have closed California locations entirely.

“Newsom’s $20 wage has turned out to be nothing more than a boost to his own ego at the expense of fast-food workers. His consistent claim that the law is a ‘win’ is out of touch with reality,” said Rebekah Paxton, research director at the EPI.

Employees who have retained their jobs are also feeling the impact. According to estimates from the EPI, non-tipped workers have seen their annual hours reduced by an average of 250, representing roughly $4,000 in lost income compared to previous pay levels.

At the same time, the shift toward automation is accelerating. Franchise owners are cutting staff and increasingly turning to self-service kiosks and other technology to offset higher labor costs. Many part-time workers have been replaced by automated systems.

Consumers are also feeling the effects. Research firm Datassential found that fast-food prices in California rose more than 13% after April 2024—nearly twice the rate of price increases seen nationwide. Families already struggling with inflation are now paying significantly more for basic meals.

The American Cornerstone Institute cautioned that the uniform wage mandate has placed the greatest strain on small and independently owned businesses, which lack the resources of larger chains to absorb higher labor costs.

“In the same manner, a state-wide minimum wage doesn’t make sense when applied uniformly across a state as big as California,” notes the organization.

For small franchise owners, the state’s wage mandate has erased already narrow profit margins. Many operators say they have been forced to choose between reducing staff or shutting down entirely.

Critics contend that Newsom disregarded basic economic warnings about the potential consequences of a sharp wage increase in the fast-food industry.

“This should be a wake-up call for Newsom and other policymakers pushing for drastic wage hikes that will cause unintended consequences,” said Paxton.

Supporters of the wage law point to a University of California, Berkeley study that found the increase did not lead to significant job losses and resulted in only modest price increases of about 2%.

Business groups, however, dispute those findings, arguing that the study fails to account for widespread closures, layoffs, and reduced worker hours now being reported across the state.

“His office isn’t responding because the numbers speak for themselves,” said one franchisee owner.

Republicans have been equally critical. “California was the test case, and it failed. If Democrats try to scale this nationwide, the result will be disaster for workers and consumers alike,” said one GOP strategist, according to Resist the Mainstream.

The political ramifications for Newsom could be significant. Viewed as a potential presidential contender, he now faces growing criticism that the state’s fast-food wage law has become a national cautionary example.

For Californians, the impact is tangible: tens of thousands of jobs lost, reduced employee hours, business closures, and higher prices for consumers.