A UC Berkeley research group was accused of bias in downplaying the crippling effects of California’s $20 minimum wage on the state’s fast food industry.
In a report released late September, UC Berkeley’s Institute for Research on Labor and Employment found that Gov. Gavin Newsom’s $20 minimum wage for fast-food employees – which took effect in April – raised wages without significant job losses or menu price hikes.
But the Employment Policies Institute, a conservative think tank, called out the IRLE over its “predetermined conclusions.”
“These activist academics ignore the best available data for methods that prove their predetermined conclusions,” EPI research director Rebekah Paxton told The Post in a statement. “Biased Berkeley has time and time again been debunked for its bias in favor of minimum wage hikes and the union dollars they receive. This most recent study further degrades their credibility in assessing policy impacts.”
The IRLE’s report claimed Newsom’s $20 minimum wage law raised average hourly pay by 18% on average without leading to feared job cuts or menu price hikes. Popular menu items rose in price by 3.7%, or an increase of just 15 cents for a $4 hamburger, the researchers claimed.
The UC Berkeley study analyzed UberEats data from the two weeks before and two weeks after the minimum wage law took effect on April 1.
But restaurants began hiking menu prices as early as November 2023, when Newsom signed the new minimum wage into law, the EPI argued.
The nonprofit pointed to other studies of core menu price items that showed higher increases — including Burger King’s Big Fish meal surging 53% in California, as The Post previously reported.
The IRLE also found California’s fast food industry did not suffer job losses as a result of the hefty minimum wage – but the EPI said this is because the research center, along with Newsom, used inaccurate federal data.
IRLE researchers, and Newsom, used non-seasonally adjusted federal data to show that jobs were not lost after the minimum wage hike, according to the EPI.
But non-seasonally adjusted data includes outliers – like spurts of holiday hiring during the winter months – that can cover up job losses, the EPI said.
Seasonally adjusted federal data, meanwhile, shows that California lost more than 5,400 fast-food jobs since January, according to the EPI.
The EPI claimed the job losses are unique to California’s fast food industry, since its full service restaurant and total employment numbers grew. Neighboring states’ fast food industries gained jobs in the same period, the EPI said.
“We estimate the employment effects by comparisons with control groups whose wages were not affected by the increase to $20, notably full service restaurants in California and fast food restaurants in the rest of the US,” Michael Reich, the author of the IRLE report, told The Post.
“Our employment results are the same whether we use non-seasonally adjusted or seasonally adjusted data.”
A spokesperson for Newsom said California has more fast-food jobs now than it did last year, and that fast food jobs in the state peaked this summer “at numbers never seen before.”
“This is a bogus industry group that’s funded by corporate restaurant chains to protect their profits,” a spokesperson for Newsom told The Post in a statement. “What’s good for workers is good for business.”
The EPI attacked the integrity of UC Berkeley’s researchers, arguing the group overwhelmingly supports labor unions and pro-union lawmakers. Its labor centers have received more than $1 million from unions since 2005.
The UC Berkeley report in question is the product of the IRLE’s Center on Wage and Employment Dynamics, an independent center whose funding does not come from unions, according to Reich.
“My minimum wage research papers have been published in top academic refereed economics journals and are widely cited by other economists,” Reich told The Post. “They have substantially influenced the view of the economics profession on minimum wage effects.”
The EPI’s motives have been called into question.
A 2014 report from The New York Times tied the official-sounding research center to the restaurant industry.
The nonprofit group was founded in 1991 and led by Richard Berman, an advertising and public relations executive who made millions by fighting for causes in corporate America’s favor, according to the Times.
EPI reportedly has no employees of its own. Instead, Berman’s public relations firm, Berman and Company, would “bill” the nonprofit for the work provided by his employees, according to the Times.
The institute paid his advertising firm $1.1 million in 2012, according to tax returns.
Berman is no longer with Berman and Company or involved with the EPI, an institute representative told The Post.
Berman and Company still serves as the “management firm” for the EPI, the representative said.
The EPI is funded by foundations, businesses and individuals, according to the institute.
