Can a Citywide Minimum Wage Be an Effective Policy Tool? Evidence from San Francisco

Institute of Industrial Relations Working Paper No. iirwps-111-05

41 Pages Posted: 13 Oct 2005

See all articles by Arindrajit Dube

Arindrajit Dube

University of California, Berkeley - Institute for Research on Labor and Employment

Suresh Naidu

Columbia University

Michael Reich

University of California, Berkeley - Department of Economics

Date Written: August 22, 2005

Abstract

We provide here the first study of the economic impacts of a citywide minimum wage policy - San Francisco's adoption of a minimum wage of $8.50 in early 2004. To estimate the effects of this policy we surveyed and compared medium and small restaurants in San Francisco and in nearby East Bay cities, before and after the new policy. Employers with fewer than ten employees were phased into the policy over a two-year period, creating an additional dimension of comparison. We find that the policy increased pay significantly at affected restaurants and compressed the wage distribution among restaurant workers. We do not detect any employment loss among affected restaurants; this finding is stable across alternative control groups and specifications, including type of restaurant, and location in a tourist zone or area with large immigrant concentrations. On outcomes other than employment, we find heterogeneous responses between full-service and limited-service restaurants. Limited-service restaurants increased prices and employed more full-time workers, while job tenure increased among their workers. We do not detect these effects among full-service restaurants; they did, however, increase their use of tipped workers.

Keywords: Minimum Wage, Restaurant Industry

JEL Classification: J38, J63

Suggested Citation

Dube, Arindrajit and Naidu, Suresh and Reich, Michael, Can a Citywide Minimum Wage Be an Effective Policy Tool? Evidence from San Francisco (August 22, 2005). Institute of Industrial Relations Working Paper No. iirwps-111-05. Available at SSRN: https://ssrn.com/abstract=813187 or http://dx.doi.org/10.2139/ssrn.813187

Arindrajit Dube (Contact Author)

University of California, Berkeley - Institute for Research on Labor and Employment ( email )

2521 Channing Way #5555
Berkeley, CA 94720
United States
510-642-9951 (Phone)

HOME PAGE: http://www.irle.berkeley.edu/cwed/dube.html

Suresh Naidu

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

Michael Reich

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

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-643-7079 (Phone)
510-642-6432 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
144
Abstract Views
1,158
rank
203,563
PlumX Metrics