‘Self-congratulatory propaganda’: Celeb chef slams Gavin Newsom for touting benefits of California’s $20 fast-food minimum wage — says hours have been cut and workers need second jobs

Analyzing the numbers

Gruel raised concerns about the accuracy of Newsom’s claims.

“These aren't even seasonally adjusted numbers,” he noted, referring to the data cited by the governor.

Experts have echoed Gruel’s concerns about the lack of seasonally adjusted data.

“So the governor is saying that the data shows California has the highest fast food employment it’s ever had. Unfortunately, he’s using a preliminary data set released by the Bureau of Labor Statistics,” Rebecca Paxton, research director at the Employment Policies Institute, told KTLA. “The latest set that the Bureau of Labor Statistics releases is called seasonally adjusted, which is what economists use to measure policy impacts,”

The distinction is significant because seasonally adjusted data accounts for typical seasonal employment fluctuations, such as temporary hiring spikes during holidays or reduced staffing in slower months. Seasonal adjustment provides a clearer picture of underlying trends by smoothing out these predictable variations. Without this adjustment, unadjusted numbers can present a skewed perspective, potentially misleading when assessing long-term policy impacts.

Gruel also questioned the timeframe of Newsom’s analysis.

“He's using like, nine or 10 months, and really it's only been three months in this data in which the bill actually took effect,” he explained. “In the grand scheme of 750,000 jobs isn't a huge number.”

However, Newsom’s breakdown did reveal some promising short-term figures. It showed that in April 2024, California’s fast food industry employed 739,500 workers. This number grew to 743,300 in May, 744,700 in June, and reached 750,500 by July. This means that between April and July — a period of just three months — the state added 11,000 fast food jobs

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‘Unintended consequences’

Gruel argued that even if Newsom’s numbers are accurate, they fail to capture the full picture due to the “unintended consequences” of the legislation.

One major consequence, according to Gruel, is the reduction in worker hours, which inflates job creation statistics without genuinely benefiting employees.

“The first thing that these multi-unit restaurants did when they found out about this bill was they took people who were working overtime — so anything over 40 hours — and they cut their hours down to 25 or 30. Those people went and got other jobs,” he explained.

Gruel pointed out that instead of having one person work 55 or 60 hours a week, restaurants now split that position between two employees working 30 to 32 hours each. This appears as job growth on paper.

He shared insights from his own experience as a restaurant owner, observing a noticeable increase in fast food workers seeking additional employment since the law took effect.

“I know that because starting in at roughly April, we got flooded on the full-service side with people who were looking for a second job because they weren't allowed to work overtime anymore, and this was in our restaurants, and we still are getting flooded from fast food workers looking for another job,” he recounted.

Some restaurants have closed

Gruel’s concerns align with classical economic theory, which suggests that setting a wage floor above the market equilibrium can lead to unintended consequences. Employers, faced with higher labor costs, may reduce hiring, cut workers' hours, or even eliminate positions altogether to maintain profitability. This is especially problematic for low-wage workers with less experience or skills, who are more vulnerable to these changes.

California has seen a consistent and significant increase in its minimum wage over the past decade. In 2014, the state’s minimum wage was $9.00 an hour. Today, it’s set at $16 an hour, rising to $20 an hour for fast food workers. For some business owners, this increase has forced difficult decisions.

A Fosters Freeze outlet in Lemoore shut down on April 1, leaving its workers without jobs. Its owner, Loren Wright, said in a text to KMPH that the substantial rise in minimum wage has made it challenging for small businesses to stay afloat.

Lawrence Cheng, whose family owns seven Wendy’s locations south of Los Angeles, admitted to cutting his staff’s hours due to the minimum wage increase.

“We kind of just cut where we can,” Cheng told the Associated Press. “I schedule one less person, and then I come in for that time that I didn’t schedule and I work that hour.”

However, there are alternative economic theories, such as the efficiency wage theory, which argue that higher minimum wages can boost worker productivity and reduce turnover, as better-compensated employees may be more motivated and loyal. Additionally, increased wages can boost consumer spending, as low-income workers have more disposable income, potentially stimulating economic growth.