The Franchise-Level Reality: Headcount Stability vs. Drastic Labor Hour Cuts
The contradiction between macro-level econometric studies (which find stable employment headcounts) and the negative experiences reported by business owners is resolved by a critical distinction: employment headcount does not equal labor hours.
A March 2026 study by Stephen Owen and a team of researchers at UC Santa Cruz (UCSC) bridged this gap by going directly to the source. They interviewed owners and managers representing more than 100 fast-food franchise restaurants in California and reviewed their internal financial and hiring records. They found that while employees are earning more per hour, they are working significantly fewer hours, which has diluted the policy's benefits:
"While most now earn substantially more per hour, many now work fewer hours, limiting improvements to their overall earnings. Reduced hours have also meant that fewer employees are able to qualify for benefits. In addition, many franchises have eliminated overtime, which had previously been an important way for longer-term employees to increase their earnings." (From UC Santa Cruz News (March 2026))
Concrete Evidence of Labor Hour Reductions
Rather than relying on broad administrative categories, the UCSC team analyzed actual store-level scheduling and shift data from major California franchise groups:
"According to records reviewed by the research team, Burger King locations of at least one franchise owner in coastal markets reported a more than 21% decline in shift work for employees from October 2023 to October 2024. Some locations partially restored hours by 2025, but labor-hour levels remained reduced from those measured in 2023. Meanwhile, across 18 McDonald’s franchise locations in the Central Valley, total labor hours declined by nearly 12% across equal 12-month periods from April 2023 to March 2025, equivalent to a loss of 62 full time jobs for a year." (From UC Santa Cruz News (March 2026))
These findings explain why administrative datasets like the BLS Quarterly Census of Employment and Wages (QCEW) or cellphone mobility data (such as Advan) might show stable employment levels (see Methodological Rift Over California's $20 Fast-Food Wage: Job Losses vs. Null Employment Effects). If a franchise keeps the same number of workers on the payroll but cuts everyone's weekly hours by 12% to 21%, the headcount remains unchanged, but the actual volume of labor demanded contracts significantly.
The Efficiency Wage Effect: Lower Turnover
The UCSC study did identify one clear positive outcome for both operators and workers: the higher wage acts as an "efficiency wage" that improves productivity and slashes turnover costs:
"One potential bright spot for both businesses and employees has been that increased wages have reduced turnover from between 150-300% to about 150-200%. Lower turnover improves employee productivity and reduces training expenses to businesses—the benefits of what economists recognize as an 'efficiency wage'." (From UC Santa Cruz News (March 2026))
Practical Consequences for Workers
For the individual worker, the transition to a $20 minimum wage has been double-edged:
- Underemployment: Workers are scheduled for fewer, more intense shifts.
- Loss of Benefits: By cutting weekly schedules below full-time thresholds (typically 30 hours), franchises have effectively disqualified many workers from employer-sponsored health insurance and other benefits.
- Elimination of Overtime: Overtime, a key earnings booster for veteran staff, has been strictly banned across many franchise networks.
This franchise-level reality reveals that while the "sky did not fall" on aggregate employment headcounts, the policy's costs were heavily absorbed through the rationing of hours, leaving workers with higher hourly rates but flatter weekly take-home pay.