Confirming What We Know: Harvard Study Finds Min Wage Hikes Force Restaurants To Close

Confirming What We Know: Harvard Study Finds Min Wage Hikes Force Restaurants To Close

A recent study from Harvard Business School confirmed the negative consequences long-believed by analysts who have studied the effect of minimum wage increases.

May 3, 2017

recent study from Harvard Business School confirmed the negative consequences long-held by analysts who have studied the effect of minimum wage increases.

Focusing on the restaurant industry in San Francisco, Harvard researchers found that minimum wage hikes increase the likelihood that a restaurant will be forced to close, hampering the ability of workers to find a job. Check out the headlines & write-ups that this study has generate over the past few weeks:

The Washington Free BeaconHarvard Study Finds Restaurants More Likely to Close, Less Likely to Open After Wage Hikes

The study ‘Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit,’ conducted by Dara Lee Luca and Michael Luca, studied 35,173 restaurants in the San Francisco Bay area over the course of eight years (2008-2016). Luca and Luca saw 30 percent of these restaurants close, and claimed to ‘find suggestive evidence that higher minimum wage increases restaurant exit.'”

The FederalistHarvard Study: Minimum Wage Hikes Cut Entry-Level Jobs, Harm Poor Minorities Most

“Researchers Dara Lee Luca and Michael Luca discovered that a $1 increase in the minimum wage leads to approximately a 4 to 10 percent increase in the likelihood of any given restaurant exiting the industry entirely. In economic terms, minimum wage hikes quicken a restaurant’s “shutdown” point…”

“In an era where liberal-minded folks see increasing the minimum wage as a key way to equalize economic outcomes, studies such as this undercut the ignorant economics those on the Left espouse. Basic economics tell us that increasing the minimum wage will hurt not only firms by increasing their operational costs but also the very workers they presumably fire in the process to keep those operational costs down.”

The Washington PostMinimum Wage Hikes Do Close Restaurants. Just Not The Ones You Care About

“An increase in the minimum wage does cause restaurants to close, a new study suggests. But only a certain kind of restaurant: the ones that patrons already liked less.”

Breitbart:  Harvard Research: Minimum Wage Hikes Put Non-Elite Restaurants Out of Business

This is an important conclusion because it reveals that minimum wage policies often hurt those that they are intended to help. Minimum wage hikes put employees of lower-rated restaurants at risk of losing their jobs. Owners of lower-rated restaurants are put at risk of having to shut down their businesses in response to the mandated increases in the cost of labor. And patrons of lower-rated eateries can lose dining choices.”

National Review:  The Unintended Consequences of San Francisco’s Minimum-Wage Hike

The conclusion: That over the next two years, San Francisco’s restaurant industry — the industry with the highest percentage of minimum-wage workers — will likely shrink, as nearly 6,000 restaurant employers contemplate whether paying $15 per hour salaries is feasible.”

BuzzFeed News: Bad Restaurants Are The Biggest Losers When Minimum Wage Rises, Study Finds

By the researchers’ estimates, a national minimum wage increase to $12 would close an additional 2% of restaurants, or 12,000 businesses, Yelp said in a blog.”

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