Trump Warns $20 Minimum Wage in California Hurts Businesses

U.S. President Donald Trump criticized California’s decision to raise the minimum wage for fast-food workers to $20 per hour, calling it a threat to business growth. 

Speaking at a McDonald’s “Impact Summit” last week, Trump claimed that Governor Gavin Newsom’s policies put undue pressure on employers and highlighted the broader debate over wages in the state.

The wage increase, which affects fast-food chains with more than 60 locations nationwide, took effect in April 2024, representing a 25% increase over California’s standard minimum wage of $16 per hour. The law also established an industrial standards council with authority to adjust the minimum wage annually.

While some workers, like 28-year-old Zain Mart, have seen tangible benefits, using the higher wages to support their families and personal expenses, restaurant operators have faced new pressures. McDonald’s franchisee Kerry Harper-Howie, who manages 25 locations in Los Angeles County, told reporters:

“I believe everyone deserves a fair wage, but the industry felt targeted. Every worker should receive the same increase.”

Data from UC Berkeley indicate that the median wage before the law was $17.13 per hour, meaning the average increase for affected employees was roughly 17%. Early results suggest employee turnover has declined, and most fast-food chains have continued opening new outlets in California.

However, rising labor costs combined with inflation and reduced customer foot traffic have strained profit margins, leading some operators to limit hours or modestly raise menu prices. Harper-Howie noted that price increases have generally remained below 10%, as further hikes risk alienating low-income customers.

The wage hike follows months of negotiations between labor unions and industry representatives. The International Service Employees Union emphasized that higher wages improve worker retention and quality of life, whereas some restaurant groups argued that the sector was unfairly targeted and that the increase would burden small businesses.

Despite these pressures, California remains a growth market: from Q1 2024 to Q1 2025, the state added roughly 2,300 new fast-food restaurants, a 5% growth rate, outpacing the national average of 2%.

Other U.S. states have yet to adopt similar increases, watching California as a test case. Analysts note that while employment data is mixed, some reports cite the loss of 16,000 fast-food jobs since the law’s implementation, while others, adjusting for seasonal and climate factors, see no clear negative employment trend, the debate continues over the long-term balance between fair wages and business viability.

Additional challenges, such as wildfires in Los Angeles and restrictive immigration policies, have further complicated operations. Many restaurant employees are of Latin American descent and have reported fears related to both evacuation procedures and federal enforcement policies.