[vfrogger]

A few years ago I actually read the experiment regarding the NJ fast food workers and the PA fast food workers shortly after NJ passed a minimum wage. I saw it consistently being brought up in conversations regarding minimum wage, which is very interesting to me for some reason.

So this is the report that was supposed to show that minimum wage increases don't affect employment rate (infact, they actually might improve it), however, when you look at the data presented within the study itself, you find that indeed, the NJ employment rate seemed to increase, and the PA employment rate seemed to decrease slightly. However, when you look at the number of employees per fast food restaurant, you'll see that the NJ restaurants started at a much lower number per restaurant than the PA restaurants, and then that employees per restaurant metric raises up by the end of the study but it never reaches the same number as the PA restaurants.

What that study actually seemed to show to me, is given the ample notice that business owners had about the minimum wage increase, they thinned out their workforce. Then the minimum wage increase came (the study actually started shortly after the increase had already been put in place, I believe), and the business owners realized they over thinned out the workforce, hired a few more people to get to the right number which was still less than the PA number with lower labor costs.

And since we don't exist in a vacuum, once a business owner realizes their store in NJ can run on 18 people, why should they run their store in PA with 20? It could probably make due with 19.

However, no one ever brings up the point that per restaurant, NJ never had as many employees as PA, essentially stating that PA was using more employees to accomplish the same job as NJ, which is exactly what you would expect to happen from an increase in labor cost.

Instead, everyone only focuses on the jobs added/lost during the short time of the study. It's like I'm the only person in the world who actually looked at the data in the report, instead of just reading the author's findings. Very Frustrating to consistently seeing this study shown as proof that minimum wage doesn't affect employment numbers.

[crdoconnor]

That study was replicated across other state borders. Same outcome. No statistically significant change in employment detected.

The amount of vitriol thrown at that particular study is pretty shocking. You can tell it's a threat. One "researcher" (Neumark) even went as far as to redo the study with a restricted, smaller data set in order to yield the preferred outcome - a decrease in employment.

[vfrogger]

Perhaps the other studies were "better" and not as flawed in their methods (starting a study after the minimum wage was put in place to see if there was a decrease in employment leading up to the wage increase is a huge flaw, and then failing to address why NJ had so fewer employees per restaurant is another related big flaw). However, if these other studies take into consideration these components, they would be very interesting. However, if they are actual copies of the previous methodology, then I'm not interested in them.

[crdoconnor]

>Perhaps the other studies were "better" and not as flawed in their methods

Their methods weren't flawed.

That study undermined the arguments of a very powerful group of lobbyists and left them exposed. Of course they were going to do everything they could to discredit it, including but not limited to outright lies and dubious reinterpretation of the results.

[vfrogger]

OK, I'll retract my statement about the study starting after the minimum wage was put in place, it looks like that isn't true. Furthermore, I will admit that the results have been replicated in other studies.

After researching more into the subject I have come to the following conclusion:

Raising Minimum Wages marginally has no effect on employment rates, only when the increase in pay can be tolerated by employers by absorbing the increased cost by increasing prices, reducing higher paid employee's wages, reducing employee turnover costs, and reducing profitability.

The end result is a smattering of higher priced goods, lower paid managers, and less incentive to start a business relying on low skilled workers. Also, you can throw in some lower job turnover as well, since the cost of losing your job is greater.

Of course, the next question is, when is "marginal", no longer "marginal"? Is it $15/hr, $20, $50? At some point, alternative methods to manual labor will become cheaper (such as dropping $100k upfront for a burger making robot). Once we hit that point, things will get ugly fast.