Adjusted federal jobs data contradicts Newsom’s claims about fast food jobs

(The Center Square) - While California Governor Gavin Newsom touted California’s fast food jobs growth in a Fox News opinion column Wednesday, seasonally adjusted federal employment data contradicts the governor’s claims, finding that overall fast food employment is down since the start of the year. The $20 per hour fast food minimum wage is credited by businesses as driving cuts on available shifts and employment, and even store closures.

“Since the law was enacted, California has added 11,000 new jobs in the industry. As of July, our state boasts a historic 750,500 fast-food jobs,” wrote Newsom in his Fox News column.

Using the most accurate, business-reported employment data from the time the governor signed a $20 per hour fast food minimum wage law at the end of September 2023, until March of 2024, the most recent point for which federal, finalized payroll survey data is available fast food employment is down by approximately 6,000 jobs, says the Employment Policies Institute, an organization that seeks to limit labor regulations.

“The OpEd in Fox News today by the governor is disappointing because it paints a very misleading picture about what's going on on the ground,” said Rebekah Paxton, Director of Research and State Coalitions at the Employment Policies Institute, in an interview with The Center Square. “Instead of touting these numbers that most economists would say don’t accurately measure the situation, it would behoove Governor Newsom to talk to the workers and talk to the operators who are losing their jobs and losing their livelihoods as a result of this policy.”

Paxton says that while the payroll-based business survey which covers 95% of businesses and currently provides data through March of 2024 is most accurate, the seasonally adjusted jobs numbers that take into account seasonal fluctuations in hiring, such as typical summer hiring sprees in places like California, are generally used by economists as a reliable jobs indicator, while non-seasonally adjusted, preliminary jobs figures cited by Newsom tend to be the least accurate.

An additional factor is that the most recent seasonally adjusted and non-seasonally adjusted jobs figures are still being revised; the federal government says between April 2023 and March 2024, it overestimated jobs figures by 818,000. Once final figures (seasonally adjusted and not adjusted) come out for April 2024 and beyond — the fast food wage took effect April 1 — a more accurate picture of the state of fast food employment in California will emerge.

Typically there is a major month-over-month hiring spree in July compared to June to account for the summer tourism season in California; California lost 6,199 fast food workers in the first six months of the year, while gaining 3,433 in July, for a net loss thus far this year of 2,766. Excluding 2020, 2024, with 0.5% fast food employment growth year-over-year, is the slowest it’s been since 2010.

EPI just finished a survey of nearly 200 fast food businesses to determine the costs of the minimum wage hike and actions the restaurants were considering taking. 98% of restaurants have raised menu prices, 89% have reduced employee hours, 73% have reduced employee shift pick-up or overtime, and 70% have consolidated or fired staff, as a result of the wage law.

Nearly 90% of owners said they are less likely to expand in California, 74% say there’s an increase in the likelihood of shutting their restaurants down, and 67% of respondents said the wage law will cost each location at least $100,000 per year.