The Effect of the Minimum Wage on the Fast Food Industry

Lawrence Katz and Alan Krueger

No 678, Working Papers from Princeton University, Department of Economics, Industrial Relations Section.

Abstract: Using data from a longitudinal survey of fast food restaurants in Texas, the authors examine the impact of recent changes in the federal minimum wage on a low-wage labor market. The authors draw three main conclusions - first - the survey results indicate that less than 5 percent of fast food restaurants use the new youth subminimum wage even though the vast majority paid a starting wage below the new hourly minimum wage immediately before it went into effect. Second, although some restaurants increased wages by an amount exceeding that necessary to comply with higher minimum wages in both 1990 and 1991, recent increases in the federal minimum wage have greatly compressed the distribution of starting wages in the Texas fast food industry. Third, employment increased relatively in those firms likely to have been most affected by the 1991 minimum wage increase, while price changes appear to be unrelated to mandated wage changes. These employment and price changes do not seem consistent with conventional views of the effects of increases in a binding minimum wage.

Keywords: minimum wage; prices; employment; subminimum wage (search for similar items in EconPapers)
JEL-codes: C40 (search for similar items in EconPapers)
Date: 1992-02
References: Add references at CitEc
Citations: View citations in EconPapers (245)

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Related works:
Journal Article: The Effect of the Minimum Wage on the Fast-Food Industry (1992)
Working Paper: The Effect of the Minimum Wage on the Fast Food Industry (1992)
Working Paper: The Effect of the Minimum Wage on the Fast Food Industry (1992)
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Persistent link: https://EconPapers.repec.org/RePEc:pri:indrel:298

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