Labor Market Effects of California’s $20 Fast-Food Minimum Wage

Arindrajit Dube

No 35171, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: California’s AB 1228 raised the minimum wage for large fast-food chains to $20 per hour in April 2024—roughly 77 percent of the state’s median hourly wage, the highest wage floor for fast-food workers in the U.S. Using QCEW data through 2025Q3, I estimate that the policy raised fast-food wages by about 7 percent. A conventional difference-in-differences yields an employment own-wage elasticity (OWE) of −0.19; synthetic difference-in-differences, which reweights controls to match California’s pretreatment trajectory, shrinks the OWE to −0.04. Newly available QWI data through 2024Q4 yield estimates that are on average more positive. Across 32 QCEW and QWI specifications, the OWE ranges from −0.29 to +0.26, bracketing the median OWE of −0.02 I compute across 27 post-2010 state minimum-wage events despite AB 1228’s much larger bite. The QWI also reveals a sharp reduction in the separation rate, with own-wage elasticities of −1.7 to −4.2—several times the restaurant-sector benchmark in Dube et al. (2016) and consistent with a monopsonistic quit-reduction channel. Wage and separation-rate effects concentrate among large employers covered by AB 1228, with limited spillovers. The fall in separations also helps reconcile the somewhat more negative QCEW employment estimates.

JEL-codes: J0 J20 J80 J88 (search for similar items in EconPapers)
Date: 2026-05
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