About 20 years ago, in the midst of a recession, New Jersey decided to boost its minimum wage to $5.05 an hour from $4.25. Its neighbor to the west, Pennsylvania, chose not to tinker with its wage floor. Two bright young economists at Princeton, David Card and Alan B. Krueger, recognized in that dull occurrence a promising natural experiment.
The two found fast-food joints along the New Jersey-Pennsylvania border, and surveyed them twice over the course of 11 months about how many people they employed. They figured that when New Jersey’s minimum wage went up, Garden State burger joints would hire fewer workers. The ones on the Pennsylvania side, acting as a kind of control, would see no change.
They were wrong. To everyone’s surprise, there was actually no change in employment in the New Jersey restaurants, relative to the Pennsylvania ones. The price of low-wage work had gone up, and somehow, demand had remained the same.
Annie Lowery tackles the fast food/minimum wage debate this morning in the Times magazine, and unsurprisingly, the conclusions are what they have been: economists cannot agree on what will or will not work (some have argued that the New Jersey study above, for example, may not be a microcosm of what could happen nation-wide), raising the minimum wage alone will not eradicate poverty, and since the minimum wage has eroded over time and Washington has been lead-footed when it has come to increasing it, raising it in individual states and cities has been popular among voters.
Costco’s Craig Jelinek, who pays his workers at least $11.50 an hour to start, makes an appearance: “Paying employees good wages makes good sense for business,” he says. And as we’ve seen: It can be good business for burger joints too.
Photo: Pop Culture Geek