CA Minimum Wage Hike Backfires! Higher Prices & Lost Jobs

It's been two years since Governor Gavin Newsom and California Democrat politicians were

warned not to increase the minimum wage to $20 for fast food restaurants.

Coming up, a new study has conclusive proof showing tens of thousands of jobs destroyed.

Prices increased for consumers, but what did Newsom and the Democrats do?

They double down.

They want to impose higher wages across multiple segments of our economy, and it's going to

cost you a lot of money, cost us all a lot of jobs.

Coming up the data and what we're doing to fight back for economic, sanity, and prosperity.

I'm Carl Demyo, Chairman of Reform California and a California State Representative.

And let me just start out by saying there is no free launch, but that's what Democrats

are peddling.

California Democrats, Gavin Newsom, the legislators keep saying, oh, the big corporations

are evil and bad.

Let's raise minimum wage.

Well, hold on a second.

Everybody wants people to get higher wages, but there's a sustainable way to do that,

and there's a fantasy fake destructive way to do that, counterproductive way.

The sustainable way to do that is to create more jobs, to get people skills, to move them

up career ladders, and that means that they're earning potential increases at the same time.

The fantasy fake way to do it is just to say, well, we're just going to make way of

a magic wand and increase everyone's wages.

That's the Democrat way.

And what it usually yields is less jobs, higher costs.

People really are not going to benefit.

In fact, they're going to get hurt.

That is the whole story of the minimum wage.

The problem, though, is that while the economics are clear, the Republicans and the business

community, well, they are not very capable of explaining what's going on with the minimum

wage.

So we need to understand what the data says, and the data is overwhelming, showing job

destruction and higher costs.

But we need better messaging on the minimum wage, and in a moment, I'm going to give you

I think the best way to describe two people, how we improve wages, and what we do about

cost living.

I want to get to this study that's out from yet another university.

And when a university comes out with a study confirming basic economic realities, it's

rare because universities tend to be pretty liberal.

It is a study from the University of California, Santa Cruz, again, not a conservative think

tank.

It is a liberal academic study that basically looked at the data and had to admit, yeah, minimum

wage in the fast food industry, that knew some and the Democrats imposed, resulted in

a massive increase in costs and a destruction in jobs.

What happens when the minimum wage is increased?

Well, businesses have to consolidate, shrink the size of the workforce.

They use automation, robots, AI.

All of that is brought into the workplace because, well, they can't pencil out with a

higher labor cost for their operations.

And so they look for ways to invest long-term in recouping costs and breaking even on

things like AI and technology.

So a lot of the jobs are done away with because if you're giving a massive increase to the

workforce, you have to figure out how to do more with loss.

We also know that prices have increased because with higher minimum wage, that price increase,

that they cannot absorb through efficiencies and reducing the size of their workforce,

that price increase has to be passed on to the consumer.

Now what does that do?

What raises the cost of living across the board?

We'll have less hours, less jobs with a minimum wage, so they're less prosperous.

They're a handful that will get a wage increase, but with all of the cost increases going up

with minimum wage, that wage enhancement evaporates because the same people who are in minimum

wage jobs also have to go out and buy things.

And so the general cost increase in the economy through higher prices with wage and labor

cost increases, those costs are passed on to the very segment of the workforce that you

say you're helping with a minimum wage increase.

And so let me just start out with this first study, it was a year ago, and it was from

the National Bureau of Economic Research.

This was back in the middle of 2025, quote, new study, California's $20 minimum wage killed

18,000 restaurant jobs.

And this NBER study identified jobs in the restaurant industry prior to the minimum wage

increase, and then jobs in the first two quarters after the law went into effect.

And remember, the law went into effect in 2023.

The study showed that fast food jobs in California declined by 2.64%.

Whereas employment in non-minimum wage intensive industries had increased by 0.58%.

This contrast with the rest of the United States where fast food restaurant employment increased

marginally by less than a percent, while employment in all non-minimum wage industries

had risen by again 1%.

The authors estimated that the negative employment effect of California's minimum wage increase.

That new law was negative 2.3 to 3.9%.

Negative employment effect.

Now you might say, well, Carl, that's a small percentage.

When you add all that up, that's just one industry, that's just the restaurant industry.

When you add all that up, it has a devastating effect impact.

Remember, you're talking about real people and real jobs that have been eliminated.

California has a 5.5% unemployment rate.

The rest of the country has a 4.4% unemployment rate.

California has a 25% higher unemployment rate than the rest of the country.

I wonder why?

I wonder why California has less jobs here.

Another stat.

In the last two years, employment in California rose by 350,000 jobs in the government sector.

But in the private sector, employment plummeted by 161,000 jobs.

This is a Ponzi scheme.

This is a House of Courts.

You can't have more government jobs in a state, which require tax revenue, when the people

who pay taxes are the private sector.

That's where you're going to need to generate revenue to have a larger government.

I would argue you don't need a larger government.

Government should be using AI in automation, like any other industry, but it's not.

It's stuck in the 1900s.

All the other industries out there are using AI to thin the workforce, to reduce costs,

to reduce prices.

Unfortunately, it does reduce jobs.

But government, growing, and that's going to absolutely fall apart.

California is the worst defender when it comes to growing the size of government while

having a constrained and reduced private sector job base, because we're chasing all those

jobs out of California because we're not competitive anymore.

We have regulated and taxed all the jobs to death in the private sector.

Government jobs, it's easy for them to create.

They just simply raise taxes and start a job.

But then the tax revenue evaporates.

Some point you hit that brick wall going 90 miles an hour.

In the unemployment ratings, that 25% number, the difference between the California unemployment

rating and the rest of the country, it's only going to get worse.

And now, let's talk about this Santa Cruz report.

This came out just this past week, because if you might say, well, that's one think tank

coral from last year.

Well, this is 2026, March.

California's $20 fast food wage yields higher prices, fewer jobs, more automation.

Oh, boy, shocker.

Shocker.

It was Assembly Bill 1228 is what we're talking about.

The industry said, if you do this, we're going to cut jobs.

We're going to have to increase prices called the Fast Act.

And the University of California, Santa Cruz released a real world appraisal.

How the $20 mandate has affected owners and employees of fast food franchises, Steven Owens,

who led the team, surveyed more than 100 outlets in Santa Cruz and Central Valley.

And his conclusion, quote, implementing the Fast Act in California's $20 minimum wage

for fast food workers under Assembly Bill 1228 has created a multitude of unintended

negative consequences between government wage policies and economic realities.

Employees have been impacted with fewer job opportunities, reduced employee hours in

elimination of overtime, and new eligibility challenges for healthcare and other benefits.

Automation, such as self-water kiosk, mobile apps, AI, drive through ordering systems,

as well as innovative assembly technologies, all have been tested and implemented with

the goal to reduce labor requirements, in other words, to cut jobs.

So here's a UC Berkeley study in 2024.

Quote, we find that the policy, minimum wage increase, fast food, increased average hourly

paid by a remarkable 18%, and yet it, then by the way, that's per individual left with

a job, okay, it's not overall wages, it's 18% of the few that we're lucky enough to keep

their jobs, yet it did not reduce employment, and that's not what we're saying, the 18,000

jobs from the NEBR study.

The policy increased prices by 3.7% or 15 cents on a $4 hamburger.

Now they said contrary to claims of larger increases.

Well, the UC report chides the study for failing to include the accelerated use of automation

by fast food outlets as they reduce their steps.

So here is UC Berkeley getting debunked.

Quote, based upon what I found, I think this legislation is a classic

case of no good deed goes unpunished.

There are unintended consequences and knock-on effects, and overall I think the results

have definitely not been as positive as policymakers have been expecting.

I don't think policymakers give a rip.

They like the headlines of liberal media giving them all the accolades.

Wage increase, I hereby grant you a wage increase.

Now you're not giving someone a wage increase, you're imposing a mandate, telling someone

else to give them a wage increase, and they turn around and say, well fine, I'm going

to pass on the price to the consumer, and I'm going to cut the number of jobs.

The politician doesn't have to take responsibility for that.

They get to say, oh, that's the bad corporation over there being greedy.

Now the corporation is just simply implementing your stupid policy and having to do what

it has to do.

Let me talk about messaging on minimum wage, because what's appalling is that Republican

voters like a minimum wage increase.

They kind of have been seduced into the, maybe there's a free launch.

There's no free launch.

So let me explain how we argue minimum wage, what we should be doing.

Minimum wage increases, not only reduced jobs, not only increased prices, but they absolutely

punish new workers in the economy by reducing their opportunities to get their foot in the

door and start with an entry level job.

Minimum wage jobs are entry level jobs.

Can we all agree on that?

They're low skill entry level first time jobs.

As a worker gets more skills, more experience, they get pay increases because they're more

valuable.

They are more competent.

They have more ability and therefore they get more compensation.

That's how the economy works.

That's how the labor market works, the government politicians, they don't care about economic realities.

If you increase minimum wages, you're just reducing those entry level jobs, which means

less people have the ability to get their foot in the door.

Democrats like to say, but you can't raise a family and buy a house and send your kids

to college and retire on the minimum wage.

You shouldn't.

It's the minimum wage is not supposed to be the job you're in starting at age 16 and going

all the way to 66.

If you are still in a minimum wage job at age 66, there's something wrong with you, not

the economy with you.

You obviously do not have a lot of skills and you've not acquired a whole lot of skills.

So we have got to start creating economic policies that are rational and reflect, getting

people their first job and then allowing them to improve their earnings as they acquire

more skills.

Instead, we're literally cutting off those entry level jobs.

I also make the same argument against the policies in California banning internships.

Do you know that in California, it is impossible to give a new, like a student an internship.

No, no, you have to pay them.

Well, that's the concept of an internship is you give them a free job and they learn a

whole bunch of skills and then maybe we hire them.

By eliminating internships, you're getting rid of some of these career starting positions

where these kids get to test drive and get to see up close how a real business operates.

Learn a little bit, get their foot in the door and then maybe get a paid position.

All that's gone.

No more internships in California.

Can you imagine the number of careers and dreams and foot in the door opportunities we have

killed in California?

Oh, but those Democrat politicians, they love workers.

Don't they?

No, they hate workers.

Let's be very clear.

These damage workers, they increase the cost of living and they reduce the job opportunities.

One final point.

You want to improve people's economic lot.

Why don't we stop increasing the cost of living?

You want to give people a minimum wage increase.

Why don't we make sure that their wages go farther by, oh, I don't know, stopping all

these crazy new taxes, mandates and fees that we're applying?

Why is it that every single thing in California costs more?

From rent to food to gas to utilities to health care to daycare, everything clothing, every

category of what you buy is more expensive in California, sometimes by a factor of two,

double gas.

Some wage workers have major impacts from the price of gas because they're the ones driving

the cars, you know, and it's a regressive cost for them because someone who's rich pays

the same price for a gallon of gas as someone who's poor.

So if it's a higher price for gas, it hurts people the lower rung of the economic ladder.

People who earn less usually live farther away from their job that drive farther.

The average driver in the state of California has to pay about $2,500 a year in taxes just

for the privilege of driving a car.

That's just in taxes.

The cap and trade tax on gasoline, the gas tax, the excise tax, the sales tax, the car

tax, $2,500.

If we benched marked our gas tax, we could immediately give about $15 to $1700 of that

money back, put it in the pockets of those workers.

That's much better than a minimum wage increase and also much more appropriate and much more

sustainable.

That's got to be our message on minimum wage.

Explain to them that we don't want to destroy jobs, we don't want to increase your cost,

but if you want to help working class, make sure we have a lot more jobs, make sure that

we can equip people with better skills so they can climb that ladder and get higher

pay increases.

But most importantly, bend the cost curve in California to make things more affordable.

Look at reform California, we're bringing you the stories, the economic realities, the

bad policies that Democrats have implemented, we need to educate people, the voters in particular

on what is going on.

Can't do that without your help.

So go to the website reformcalifornia.org, share some of our stories, sign up for some

of our campaigns, including voter ID, save from 13, and help us elect better representatives

in Sacramento.

So we can reverse some of these crazy economic policies and reduce the cost of living.

Until next time, I'm Carl DeMio, Chairman of Reform California and a California State

Representative.

Thanks for watching and I hope you enjoyed this episode.

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