On March 3, 2025, California’s fast-food industry finds itself at the center of a renewed debate about wages, cost of living, and economic fairness. Just under a year after the state implemented a groundbreaking $20 per hour minimum wage for fast-food workers at chains with more than 60 locations nationwide, discussions are underway that could see these workers receive another pay increase. Reports indicate that the California Fast Food Council, a regulatory body established to oversee the industry’s labor standards, is considering a cost-of-living adjustment (COLA) that could raise wages by up to 70 cents, bringing the minimum to $20.70 per hour. This potential hike has sparked a mix of enthusiasm, concern, and skepticism among workers, business owners, and policymakers alike. In this 2,000-word exploration, we’ll unpack the context of this proposal, its potential impacts, and the broader implications for California’s economy and workforce.

The Backdrop: A Landmark Wage Increase in 2024

California’s fast-food wage saga began in earnest with the passage of Assembly Bill 1228, signed into law by Governor Gavin Newsom in September 2023 and enacted on April 1, 2024. The legislation marked a historic shift, raising the minimum wage for fast-food workers from $16 to $20 per hour—an increase of 25%. This applied specifically to employees at large chains like McDonald’s, In-N-Out, and Burger King, covering an estimated 750,000 workers statewide. The move was hailed as a victory for labor advocates, including the Service Employees International Union (SEIU), who argued that it addressed the rising cost of living in one of the nation’s most expensive states.

The law also established the California Fast Food Council, a unique entity composed of workers, restaurant owners, and state officials. Tasked with regulating pay and working conditions, the Council was granted the authority to adjust the minimum wage annually by up to 3.5% or the rate of inflation, whichever is lower. This mechanism was designed to ensure wages keep pace with economic realities, a point underscored by the SEIU’s August 2024 memo to KTLA 5 News, which called for a $20.70 wage by January 1, 2025, to “keep up with the rising cost of living.”

The initial $20 wage was a bold experiment in sectoral wage-setting, a policy approach that targets specific industries rather than applying broad minimum wage increases across all sectors. Proponents, including Newsom, argued that it would uplift low-wage workers without triggering the catastrophic job losses or price hikes predicted by critics.

Opponents, including fast-food franchise owners and industry groups like Save Local Restaurants, warned of dire consequences: layoffs, reduced hours, automation, and higher menu prices that could alienate customers.

The Proposal: Another Bump to $20.70

Fast forward to early 2025, and the Fast Food Council is once again in the spotlight. Following a motion approved in late February 2025, the Council is slated to vote on a COLA that would increase the minimum wage by as much as 70 cents per hour. This adjustment, if passed, would take effect in the near future, potentially as early as mid-2025, pending further deliberation and public input. The proposal aligns with the Council’s mandate to adjust wages based on inflation, responding to data showing that California’s cost of living continues to outpace national averages, particularly in housing, food, and transportation.

For workers, the potential increase is a lifeline. Veronica Gonzales, a fast-food worker and member of the California Fast Food Workers Union, told Reuters in February 2025 that even the $20 wage, while transformative, struggles to meet the needs of workers in a state where median rent for a one-bedroom apartment exceeds $2,000 in many cities.

“We need stable hours, pay that keeps up with inflation, and training to understand our rights,” she said, echoing sentiments from a growing labor movement pushing for further gains.

Yet, the proposal has reignited tensions. Restaurant owners, many of whom are still grappling with the fallout of the 2024 increase, argue that another hike could “cripple” their operations. In January 2025, over 625 franchisees signed a letter to the Council warning that “we simply cannot survive another wage increase,” citing already thin profit margins exacerbated by higher labor costs. This sentiment was echoed in a Berkeley Research Group study released in February 2025, which claimed that the $20 wage led to 10,700 job losses in the fast-food sector between June 2023 and June 2024, alongside a 14.5% spike in menu prices.

The Evidence: What’s Happened Since $20?

The debate over the proposed increase hinges on interpreting the effects of the $20 wage. Conflicting studies have muddied the waters, leaving policymakers and the public with competing narratives.

On one side, research from the UC Berkeley Center on Wage and Employment Dynamics paints a rosy picture. An October 2024 study, updated in February 2025, found that the $20 wage boosted average hourly pay by 18%—translating to over $4,000 annually for full-time workers—without reducing employment. Menu prices rose modestly, about 3.7%, or 15 cents on a $4 burger, far less than the double-digit increases feared by critics. The study also noted that fast-food employment grew slightly faster in California compared to states with the federal $7.25 minimum wage, with the U.S. Bureau of Labor Statistics reporting 750,500 fast-food jobs in California by July 2024—11,000 more than when the law took effect.

Governor Newsom has seized on these findings, declaring in October 2024 that “investing in workers benefits everyone—workers, businesses, and our state as a whole.” Labor advocates like Joseph Bryant of the SEIU argue that the data “undermines months of fear-mongering from global corporations,” pointing to thriving chains remodeling stores as evidence of financial health.

On the other side, the industry tells a different story. The Berkeley Research Group’s February 2025 report, commissioned by fast-food stakeholders, highlighted not only job losses but also a shift toward automation—think self-service kiosks—and reduced hours for remaining workers. Franchise owners at a September 2024 Council meeting testified to cutting staff, slowing expansion, and raising prices, which they claim has driven away cost-sensitive customers. A full-page ad in USA Today in October 2024 by the California Business and Industrial Alliance even claimed 10,000 jobs were lost, though this figure has been disputed by independent analysts.

Critics of the UC Berkeley study, like those at Reason.com in December 2024, argue that aggregate job numbers mask the real impact on low-wage workers. They suggest that California’s detailed employer reports—tracking hours and pay by Social Security number—could reveal whether workers below $20 before the law saw sustained benefits or faced hour cuts that offset wage gains. Without this granular data, the true story remains elusive.

Economic Implications: Winners and Losers

If the $20.70 wage is approved, its economic ripples will be felt across multiple fronts. For workers, the extra 70 cents per hour equates to roughly $1,456 annually for a full-time employee (assuming a 40-hour week and 52 weeks).

While modest compared to the $4 jump in 2024, it could ease the burden of inflation, particularly for the two-thirds of fast-food workers who are women, many supporting families, as noted by NBC Washington in January 2025.

For consumers, the impact hinges on price sensitivity. The UC Berkeley study suggests a minimal pass-through—perhaps a 3-4% menu price increase, or 12-16 cents on a $4 item. However, the Berkeley Research Group’s 14.5% price surge post-$20 raises questions about whether chains might overreact again, risking customer backlash in a competitive market where fast food is often a budget-friendly option.

Businesses face the toughest calculus. Large chains like McDonald’s, with robust corporate backing, may absorb the hike through efficiency gains or slight price adjustments. Franchisees, however, operate on slimmer margins. Scott Rodrick, a McDonald’s owner, told Fox Business in December 2024 that cost pressures since the $20 wage have forced tough choices—fewer hires, more kiosks, or higher prices. The National Review reported in January 2025 that hundreds of owners fear bankruptcy if wages rise again, a sentiment echoed by the Save Local Restaurants coalition.

Automation looms large as a wildcard. The Berkeley Research Group noted increased tech adoption post-$20, a trend that could accelerate with another hike. While this might preserve profits, it risks displacing the very workers the policy aims to help, particularly those with lower skills less suited to other sectors.

The Broader Context: California’s Wage Wars

This fast-food wage debate doesn’t exist in a vacuum. California has doubled its statewide minimum wage from $8 to $16 since 2014, with a bump to $16.50 set for January 2025 if Proposition 32 (an $18 wage by 2026) fails in November 2024. Healthcare workers saw their minimum rise to $18-$23 in October 2024, and cities like San Francisco already enforce higher local floors ($18.67 as of 2025). The fast-food sector’s $20 (and potentially $20.70) stands out as a sectoral outlier, raising questions about equity across industries.

Why fast food? Advocates argue it’s a high-profile, low-wage sector ripe for reform, employing over half a million Californians—more than any other state. Critics, including Fox News in February 2025, call it unfair targeting, asking why teachers or retail workers aren’t prioritized. The answer lies partly in political will: the SEIU’s organizing power and Newsom’s progressive agenda converged to make fast food a test case.

Public Sentiment and Political Stakes

Public reaction, as gleaned from X posts in late February and early March 2025, reflects a polarized landscape. Some users cheer the potential raise, with @NewsSourceLA questioning why other low-wage workers aren’t included.

Others, like franchise owners at Council meetings, decry it as unsustainable. Newsom, facing a 2026 reelection bid, has staked much of his economic legacy on these wage hikes, framing them as proof that “fair wages strengthen our economy,” as he tweeted in September 2023.

The Fast Food Council’s upcoming vote will be a litmus test. With labor pushing for the COLA and owners resisting, the decision could set a precedent for how California balances worker rights with business viability in an inflationary era.

Conclusion: A High-Stakes Balancing Act

California’s fast-food workers stand on the cusp of another pay increase, a move that could solidify the state’s reputation as a leader in labor policy—or expose the limits of wage hikes in a high-cost economy. The evidence suggests the $20 wage delivered real gains for workers with manageable costs, but the jury’s still out on long-term effects. A 70-cent bump may seem small, but its symbolic and economic weight is immense.

For workers like Gonzales, it’s a step toward dignity. For owners, it’s a threat to survival. For California, it’s a gamble on whether investing in its lowest earners can sustain growth without breaking the system. As the Fast Food Council deliberates, all eyes are on the Golden State—because what happens here could reshape the national conversation on wages, work, and worth.