We've Got You Covered: Establishment-Level Evidence on California's Fast-Food Minimum Wage

We study the employment effects of California’s $20 fast-food minimum wage. Evaluating this policy poses two challenges in commonly used aggregate datasets: coverage is based on 60-establishment chain-size threshold that cannot be identified; and there is measurement error in the industry codes used to identify fast-food restaurants. We address these challenges using establishment-level data. We find evidence of negative employment effects, but they are concentrated among small chains, among which the policy also slowed entry and increased exit. Thus, the primary effect of the fast-food minimum wage was to disadvantage small chains, albeit with modest overall employment effects thus far.