Fast-food workers in California may be earning more money, but their employers are cutting their hours to make up for the cost of higher pay. That’s from a new study published in Applied Economic Letters in early March. Northeastern University postdoctoral research fellow Hitanshu Pandit, who was the author on the paper, used cellphone data to analyze the impact of a law that increased the Golden State’s minimum wage for fast-food workers by 25%.
Pandit found that the 2024 wage hike translated to an average 8% decrease in on-site staffing at California fast-food restaurants – that could have meant fewer workers on the floor, fewer hours offered or a mix of both. In other words, each dollar that the worker’s wage increases results in a 3% reduction in staffing, Pandit found. The findings could have implications for how fast-food restaurant operators adjust their costs to stay in business. The more employers need to spend on wages could lead to more automation, less quality and fewer job opportunities for teenagers and young workers getting their start in the workplace, to name a few examples, Pandit said.
