About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

60 Indus. & Lab. Rel. Rev. 522 (2006-2007)
The Economic Effects of a Citywide Minimum Wage

handle is hein.journals/ialrr60 and id is 522 raw text is: THE ECONOMIC EFFECTS OF A CITYWIDE MINIMUM WAGE ARINDRAJIT DUBE, SURESH NAIDU, and MICHAEL REICH* This paper presents the first study of the economic effects of a citywide minimum wage-San Francisco's adoption of an indexed minimum wage, set at $8.50 in 2004 and $9.14 by 2007. Compared to earlier benchmark studies by Card and Krueger and by Neumark and Wascher, this study surveys table-service as well as fast-food restaurants, includes more control groups, and collects data for more outcomes. The authors find that the policy increased worker pay and compressed wage inequality, but did not create any detectable employment loss among affected restaurants. The authors also find smaller amounts of measurement error than characterized the earlier studies, and so they can reject previous negative employment estimates with greater confidence. Fast-food and table-service restaurants responded differently to the policy, with a small price increase and substantial increases in job tenure and in the proportion of full-time workers among fast-food restaurants, but not among table-service restaurants. n November 2003 San Francisco vot- ers passed a ballot proposition to enact a minimum wage covering all employers in the city. The new standard set a minimum wage of $8.50 per hour-an increase of over 26% above the California minimum wage of $6.75-and an annual adjustment for cost- of-living increases (reaching $9.14 in 2007). This standard, which first became effective in late February 2004, constituted the high- est minimum wage in the United States and the first implemented municipal minimum wage in a major city (excluding the District of Columbia). In a prospective study of this policy, Reich and Laitinen (2003) estimated that about 54,000 workers, amounting to *Arindrajit Dube is a Research Economist at the Institute for Research on Labor and Employment (IRLE), University of California, Berkeley; Suresh Naidu is a graduate student researcher at IRLE; and Michael Reich is Professor of Economics and Director of IRLE. The authors thank Eric Freeman, Amy Vassalotti, Gina Vickery, and Steven Wertheim for excellent research assistance and the Rockefeller and Russell Sage Foun- dations for their support. They received helpful com- ments from Orley Ashenfelter, Jared Bernstein, David 10.6% of the city's work force, would receive wage increases, either directly or indirectly, if such a policy were adopted, and that the in- creased wage costs on average would amount to about 1% of business operating costs. Simple trends from county-level QCEW administrative data comparing San Francisco with nearbyAlameda County suggest that the policy did increase pay, and moreover did so without affecting employment. Figures l and 2 present these comparisons for restaurants, the industrywith the greatest proportion and absolute number of minimum wage workers. In the years prior to the enactment of the San Francisco policy, restaurant pay and employ- mentin these two geographic areas exhibited quite similar trends. After the policy was Card, and seminar participants at U.C.-Berkeley and at the Labor and Employment Relations Association annual meeting, where earlier versions of this paper were presented. The authors will supply the data used in this study to others upon request. Contact them at Institute for Research on Labor and Employment, University of California, Berkeley, CA 94720-5555. Industrial and Labor Relations Reuiew, Vol. 60, No. 4 (July 2007). © by Cornell University. 0019-7939/00/6004 $01.00

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most