Adjusting minimum wages for inflation is a necessary yet modest step toward protecting affordability for low-wage worker
In 2024, the California Fast Food Council—composed of worker, industry, and government representatives—instituted a $20 minimum wage for workers at large chain fast-food restaurants. The Council is also empowered to protect this new wage standard from inflation by raising it by the annualized increase in the consumer price index or 3.5%, whichever is lower.
The Council was preparing to discuss a wage adjustment in June 2025 when the chair resigned. It is expected to take up the issue when the governor names a new chair, which has yet to happen. Given that almost two years have passed since the initial setting of the $20 wage standard—a year and a half that has seen continued inflation—the Council should prioritize this cost-of-living adjustment in 2026 to prevent rising prices from erasing the gains made by fast-food workers. One impediment to this adjustment is opposition from fast-food restaurant operators, who argue that raising workers’ pay to $20 damaged their businesses and that they cannot absorb any further increases.
This debate in California between fast-food workers and employers highlights the importance of regular and automatic adjustments to wage standards (like minimum wages) that ensure inflation-adjusted living standards for low-wage workers do not erode over time.
Indexation is often an afterthought in debates over wage standards. But it can turn out to be the most important part of any policy that sets a wage standard. This report examines salient issues related to indexing wage standards and offers recommendations for policymakers. Its key arguments are:
https://www.epi.org/publication/adjusting-minimum-wages-for-inflation-is-a-necessary-yet-modest-step-toward-protecting-affordability-for-low-wage-workers-the-case-of-californias-fast-food-council/