WITH Republicans in charge in Washington, the federal minimum wage is unlikely to alter soon. But debate over the impact of local pay floors is as hot as ever. Little wonder: 18 states and 22 cities and counties raised their minimum wages at the start of 2017, according to the National Employment Law Project, a campaign group. Left-wing activists have for years pushed politicians to guarantee minimum pay of $15 an hour, more than twice the federal minimum of $7.25, which last went up in 2009.
A new working paper by Dara Lee Luca of Mathematica Policy Research and Michael Luca of Harvard Business School looks at the impact of higher minimum wages from a new angle. Traditionally, scholars have focused on whether or not minimum wages reduce employment. But the Lucas asked something else: does it force firms out of business? In particular, they looked at the restaurant industry—about half of minimum-wage workers toil over food—in the San Francisco Bay Area, which contains 15 of the 41 cities and counties that have changed their minimum wages since 2012. Their analysis relies on data from Yelp, a restaurant-review app favoured by...Continue reading
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