A Reanalysis of the Effect of the New Jersey Minimum Wage Increase on the Fast-Food Industry with Representative Payroll Data

47 Pages Posted: 6 Jul 2000 Last revised: 8 Jun 2013

See all articles by David Card

David Card

University of California, Berkeley - Department of Economics; Institute for the Study of Labor (IZA); National Bureau of Economic Research (NBER)

Alan B. Krueger

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Date Written: January 1998

Abstract

This paper re-examines the effect of the 1992 New Jersey minimum wage increase on employment in the fast-food industry. We begin by analyzing employment trends using a comprehensive new data set derived from the Bureau of Labor Statistics's (BLS's) ES-202 data file. Both a longitudinal sample and a repeated-cross-section sample drawn from these data indicate similar or slightly faster employment growth in New Jersey relative to eastern Pennsylvania after the rise in New Jersey's minimum wage, consistent with the main findings of our earlier survey. We also use the ES-202 data to measure the effects of the 1996 increase in the federal minimum wage, which raised the minimum wage in Pennsylvania but not in New Jersey. We find no indication of relative employment losses in Pennsylvania. In light of these findings, we re-examine employment trends in the sample of fast-food restaurants assembled by the Employment Policies Institute (EPI) and David Neumark and William Wascher. The differences between this sample and both the BLS data and our earlier sample are attributable to a small set of restaurants owned by a single franchisee who provided the original Pennsylvania data for the 1995 EPI study. We also find that employment trends in the EPI/Neumark-Wascher sample are strikingly different for firms that reported their data on a weekly, biweekly or monthly basis, possibly because of seasonal factors. Controlling for the systematic effects of the varying reporting intervals, the combined EPI/Neumark-Wascher sample shows no difference in hours growth between New Jersey and Pennsylvania.

Suggested Citation

Card, David E. and Krueger, Alan B., A Reanalysis of the Effect of the New Jersey Minimum Wage Increase on the Fast-Food Industry with Representative Payroll Data (January 1998). NBER Working Paper No. w6386. Available at SSRN: https://ssrn.com/abstract=226134

David E. Card (Contact Author)

University of California, Berkeley - Department of Economics ( email )

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Institute for the Study of Labor (IZA)

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National Bureau of Economic Research (NBER)

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Alan B. Krueger

Princeton University - Industrial Relations Section ( email )

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National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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