According to a working paper by Michael Reich and Denis Sosinskiy of the Institute for Research on Labor and Employment at the University of California, Berkeley, raising the minimum wage for fast-food workers to $20 led to an average pay increase of 18 percent per worker but did not reduce fast-food employment. Prices did go up, with some variation between chains and menu items, but the average increase of around 3.7 percent (“about 15 cents on a $4 hamburger,” as the Reich and Sosinskiy put it) was marginal. The researchers estimate consumers absorbed almost two-thirds of the increased costs.
There are some gaps in the new study. As anyone who’s worked a low-wage job knows, if they want to save money, employers may not cut workers’ hourly rate, but they will cut the number of hours they spend on the job. Reich and Sosinskiy didn’t assess the law’s impact on working hours, since the necessary data wasn’t available. But even with questions remaining, a little over a year since its passage, AB 1228 looks like a step toward fairness.