The Effects of California's $20 Fast Food Minimum Wage on Prices -- by Jeffrey Clemens, Olivia Edwards, Jonathan Meer, Joshua D. Nguyen
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Quick Summary
We analyze the effect of California's $20 fast food minimum wage (Assembly Bill 1228), enacted in September 2023 and implemented in April 2024, on consumer prices using the Bureau of Labor Statistics' Consumer Price Indices for food away from home across 21 metropolitan statistical areas. Food away from home prices in California's four in-sample MSAs increased by 3.3 to 3.6 percent relative to 17 control MSAs through December 2024. Our estimates are stable across a number of specifications. Placebo tests on price indices for goods and services that were not affected by the policy, including food at home, show no differential increases in California's MSAs. The price increases we estimate likely arise in part from spillovers to the full-service sector, as well as changes in the production functions and product quality choices of limited service restaurants.