A new report from Cornell University suggests that for the past 20 years, restaurants haven’t been affected by minimum wage increases at any level.
Titled “Have Minimum Wage Increases Hurt the Restaurant Industry? The Evidence Says No!” the report, authored by Michael Lynn and Christopher Boone of Cornell University’s School of Hotel Administration and published by the Center for Hospitality Research, challenges the belief that a higher minimum wage equals a cut in staff or increase in prices of goods.
“There is no doubt that restaurateurs face higher expenses as a result of minimum wage increases, but if restaurants are raising prices to compensate, those increases do not appear to decrease demand or profitability enough to sizably or reliably decrease either the number of restaurants or the number of employees,” said Lynn in a statement.
“While we don’t see strong impacts on employment, we do find consistent evidence that raising the minimum wage increases the total earnings of the restaurant workforce,” said Boone. “Restaurants are likely to see some benefits as well, since better compensated employees tend to be happier, more productive and less likely to quit their jobs. So we think the restaurant industry should support reasonable increases in the regular and tipped minimum wages.”
Last year, the federal minimum wage was $2.13 for tipped workers and $7.25 for non-tipped workers, but in New York State—ground zero for the Fight for $15 movement—the minimum wage was $7.50 for tipped workers and $8.75 for non-tipped workers. In California, the state minimum wage for both tipped and non-tipped workers was $9.00.
Lynn and Boone looked at the impact of state and federal minimum wage laws on tipped and non-tipped workers. Laws tend to vary from state to state. The federal tipped minimum wage has stayed the same since 1991, but the federal non-tipped minimum wage has increased five times in the same period (the state level has experienced similar changes).
With the minimum wage varying from state to state, Lynn and Boone studied the links between the levels of minimum wage and outcomes of employment and found the restaurant industry wasn’t harmed by modest wage hikes.
But Lynn and Boone said that the conclusions reached in the report only apply to the modest increases implemented from 1995 to 2014 and suggest that the upcoming wage increases in San Francisco, Seattle and Los Angeles (all to $15) might have a bigger impact negatively on the restaurateurs. Lynn said “The industry may be justified in opposing immediate, large hikes in the minimum wages, but data do not support opposition to all minimum wage increases.”