Don't fear modest wage increases
Wage increases don't close down restaurants, but the key may be moderation. The impact of a large income increase, like $15 for fast food workers, is still unknown.聽
Wage increases don't close down restaurants, but the key may be moderation. The impact of a large income increase, like $15 for fast food workers, is still unknown.聽
Do modest minimum-wage increases result in lost restaurant jobs, shuttered restaurants and reduced consumer visits? New research from two Cornell School of Hotel Administration faculty members concludes that they do not. In fact, they argue a wage increase can reduce labor turnover and improve productivity.
But before the 鈥淔ight for $15鈥� movement celebrates, the research authors caution that their study covers 鈥渕odest鈥� (i.e. 10%) increases in the minimum and does not encompass the larger, up to 50% increases being proposed, which they say could have more negative effects on the restaurant business. 鈥淭he industry may be justified in opposing immediate, large hikes in the minimum wages, but data do not support opposition to all minimum wage increases,鈥� write Michael Lynn and Christopher Boone in their paper, 鈥淗ave Minimum Wage Increases Hurt the Restaurant Industry? The Evidence Says No!鈥� The paper聽is published聽by Cornell鈥檚 Center for Hospitality Research.
Among the study鈥檚 findings and conclusions:
鈬�聽鈥淎 10% increase in the regular minimum wage increases聽full-service restaurant聽wages by a little less than 1% and a 10% increase in the tipped minimum wage increases full-service restaurant wages by a little less than 0.5%.鈥�
鈬�聽鈥淎 10% increase in the regular minimum wage increases聽limited-service谤别蝉迟补耻谤补苍迟听wages by a little less than 1% increases in the minimum wage have no large and reliable effects on the number of limited-service establishments or their levels of employment.鈥�
鈬�聽鈥淩elatively modest mandated increases in employees鈥� regular and tipped minimum wages in the past t20years聽have not had large or reliable effects聽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.鈥�
鈬�聽鈥淸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.鈥�
Lynn and Boone conclude 鈥渢he evidence suggests that the restaurant industry should accept reasonable, modest increases in the minimum wage.鈥�
This article first appeared at BurgerBusiness.