Across the country, raising the minimum wage continues to be a topic of conversation. Some claim that raising the minimum wage to $20 would help both low-income employees as well as employers. Though some are moving forward with this experiment, others are being more cautious.
For example, voters in Olympia, Wash., this year rejected a ballot measure to raise the minimum wage to $20 an hour. California, however, recently enacted this policy for the fast-food sector with disastrous effects.
On April 1, 2024, California implemented a $20 minimum wage for fast food employees. To fit this definition, an operation has to offer limited or no table service, and customers pay for the items before they are consumed. Also, the restaurant has to be a part of at least 60 establishments nationwide.
The National Bureau of Economic Research found that California’s fast food minimum wage increase led to a detrimental effect on jobs , totaling around 18,000 jobs lost in the fast-food market in California from September of 2023 to September of 2024. Relative to the rest of the country, employment in California’s fast-food sector declined by 2.7% more during that time period.
Using the 2023 figures from the Bureau of Labor Statistics, a $20 minimum wage imposition for fast food employees would harm the labor force in every state. Washington, Idaho, Montana, and Wyoming should pay attention to these results as they consider similar policies.
Washington state already has a high minimum wage of $16.66 for fast food workers. The industry employs roughly 100,100 fast food employees. Based on the California study, if the state implemented a $20 minimum wage, this would be a 20% increase from its current minimum, resulting in 2,402 jobs lost.
A study done by the Washington Hospitality Association found that eating out in Seattle already costs 17% more than it does on average across 20 major U.S cities. A majority of this unaffordability can be attributed to the high minimum wage, meaning employers have to increase menu prices to make up the cost on their razor-thin profit margin.
Idaho has a minimum wage of $7.25 for fast food workers, and it employs 20,840 workers in the industry. Increasing the minimum wage to $20 would result in 4,395 jobs lost, which would be a major shock to the industry.
Montana has a minimum wage of $9.95 and employs 15,380 fast food employees. With a $20 minimum wage increase, the state would lose about 1,860 jobs. Montana would find itself in a situation that sits right in between the estimated impacts for Washington and Idaho.
Wyoming has a minimum wage of $7.25. The Bureau of Labor Statistics doesn’t have as accurate job numbers for Wyoming and may have suppressed them. This is because Wyoming has a small fast-food employee population, and confidentiality could be breached. The best estimates are around 6,500 fast food jobs. Based on the estimates, a $20 minimum wage would result in a loss of 1,372 fast food jobs.
A simple economic principle is that when the price of something goes up, people will buy less of it. That exact rule applies to labor as well. Large minimum wage increases greatly contribute to job loss. As the wages increase, businesses may be forced to reduce staff to offset higher labor costs, as occurred in California.
Proposals for large minimum wage increases have become a policy prescription to combat poverty, but they operate on a false premise. It says that raising the minimum wage will improve the well-being of the workers affected, but that is far from the truth. The minimum wage of a fast food worker let go is zero.
States in our region can avoid this outcome. If policymakers really want the best for these fast-food workers, they should avoid proposals that put their jobs in jeopardy. Let California’s failed $20 minimum wage experiment serve as a warning to the rest of the country.
Sam Cardwell is a Policy Analyst for the Mountain States Policy Center, an independent research organization based in Idaho, Montana, Eastern Washington and Wyoming. Online at mountainstatespolicy.org.
