Discussions of raising our nation’s federal minimum wage are often met with the objection that paying workers more would kill the profitability of businesses like restaurants.
Not so, says a new study.
The study, from Cornell University’s Center for Hospitality Research, shows that not only do minimum wage increases NOT hurt the restaurant industry, it also appears to make workers more productive.
Imagine that. Paying workers more gets more work out of them.
From the study:
[The] results of this study confirm previous findings, namely, that the relatively modest mandated increases in employees’ regular and tipped minimum wages in the past twenty years have not had large or reliable effects on the number of restaurant establishments or restaurant industry employment levels, although those increases have raised restaurant industry wages overall. Even when restaurants have raised prices in response to wage increases, those price increases do not appear to have decreased demand or profitability enough to sizably or reliably decrease either the number of restaurant establishments or the number of their employees. Although minimum wage increases almost certainly necessitate changes in restaurant prices or operations, those changes do not appear to dramatically affect overall demand or industry size. Furthermore, there is strong evidence that increases in the minimum wage reduce turnover, and good reason to believe that it may increase employee productivity as well.
You can read the whole study for yourself here: Have Minimum Wage Increases Hurt the Restaurant Industry? The Evidence Says No!