Not better controlled, and also not really more recent -
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We re-evaluate the evidence from Card and Krueger's (1994) New Jersey-Pennsylvania minimum wage experiment, using new data based on actual payroll records from 230 Burger King, KFC, Wendy's, and Roy Rogers restaurants in New Jersey and Pennsylvania. We compare results using these payroll data to those using CK's data, which were collected by telephone surveys. We have two findings to report. First, the data collected by CK appear to indicate greater employment variation over the eight-month period between their surveys than do the payroll data. For example, in the full sample the standard deviation of employment change in CK's data is three times as large as that in the payroll data. Second, estimates of the employment effect of the New Jersey minimum wage increase from the payroll data lead to the opposite conclusion from that reached by CK. For comparable sets of restaurants, differences-in-differences estimates using CK's data imply that the New Jersey minimum wage increase (of 18.8 percent) resulted in an employment increase of 17.6 percent relative to the Pennsylvania control group, an elasticity of 0.93. In contrast, estimates based on the payroll data suggest that the New Jersey minimum wage increase led to a 4.6 percent decrease in employment in New Jersey relative to the Pennsylvania control group. This decrease is statistically significant at the five-percent level and implies an elasticity of employment with respect to the minimum wage of -0.24.
nber.org
Minimum Wage Effects in the Longer Run David Neumark, Olena Nizalova
NBER Working Paper No. 10656
Issued in July 2004
NBER Program(s): LS
Exposure to minimum wages at young ages may lead to longer-run effects. Among the possible adverse longer-run effects are decreased labor market experience and accumulation of tenure, lower current labor supply because of lower wages, and diminished training and skill acquisition. Beneficial longer-run effects could arise if minimum wages increase skill acquisition, or if short-term wage increases are long-lasting. We estimate the longer-run effects of minimum wages by using information on the minimum wage history that workers have faced since potentially entering the labor market. The evidence indicates that even as individuals reach their late 20's, they work less and earn less the longer they were exposed to a higher minimum wage, especially as a teenager. The adverse longer-run effects of facing high minimum wages as a teenager are stronger for blacks. From a policy perspective, these longer-run effects of minimum wages are likely more significant than the contemporaneous effects of minimum wages on youths that are the focus of most research and policy debate.
nber.org
Minimum Wages and Employment in France and the United States
John M. Abowd, Francis Kramarz, David N. Margolis
NBER Working Paper No. 6996
Issued in March 1999
NBER Program(s): LS
We use longitudinal individual wage and employment data in France and the United States to investigate the effect of changes in the real minimum wage on an individual's employment status. We find that movements in both French and American real minimum wages are associated with mild employment effects in general and very strong effects on workers employed at the minimum wage. In the French case, a 1% increase in the real minimum wage decreases the future employment probability of a man (respectively, a woman) currently employed at the minimum wage by 1.3% (1.0%). In the United States, a decrease in the real minimum wage of 1% increases the probability that a man (woman) employed at the minimum wage came from unemployment in the previous year by 0.4% (1.6%).
nber.org
But analysis by independent researchers revealed the Krueger-Card report, which was based on a phone survey in which fast food restaurant managers and assistant managers were asked about their staff size, to be deeply flawed. The Employment Policy Institute analyzed the phone survey results against actual payroll data from the restaurants and concluded that “the data set used in the New Jersey study bears no relation to numbers drawn from payroll records of the restaurants the New Jersey study claims to cover.”
According to the Krueger-Card data set, a Burger King in New Jersey went from zero to 29 full-time workers after the minimum wage hike between February and November of 1992, while a Wendy’s in Pennsylvania reduced its workforce from 30 to zero full-time workers during the same nine-month period. Truly radical — indeed, implausible — shifts in a business’s employment strategy. When compared to actual employment records, the EPI analysis found that in one third of the restaurants surveyed, Krueger-Card even got the direction of employment change (whether staff was cut of added) wrong.
A subsequent analysis published by the National Bureau of Economic Research based on payroll records of fast-food restaurants during the same period revealed that Garden State workers experienced a 4.6 percent decrease in employment after the minimum wage hike compared to the Pennsylvania control group. In other words, they confirmed the commonsense economic principle that when something costs more, people can afford less of it. Or in the case of a minimum-wage hike, when workers cost more to employ, businesses can afford to hire fewer workers.
nationalreview.com
Proponents of a higher minimum wage have rested their case on Dube et al. and related studies—such as Sylvia Allegretto, Dube, and Reich, who conclude that “minimum wage increases—in the range that have been implemented in the United States—do not reduce employment among teens.” Neumark, Salas, and Wascher, in a new study for the National Bureau of Economic Research, argue that “neither the conclusions of these studies nor the methods they use are supported by the data.” Indeed, Dube et al. admit that their data prevent them from testing “whether restaurants respond to minimum wage increases by hiring more skilled workers and fewer less-skilled ones.”
Message 28926580
Sperling on the Minimum Wage
Gene Sperling, former economic adviser to Bill Clinton, tries to get President Bush to endorse a minimum-wage increase. Gene dismisses worries about adverse effects on employment. He writes:
No one has yet rebutted convincingly David Card and Alan Krueger's study that compared fast-food jobs on the border of New Jersey and Pennsylvania, and found no decrease in lower-wage jobs after New Jersey raised its state minimum wage. The key word here is "convincingly." Gene is, apparently, not convinced by the Neumark-Wascher study that reevaluated the Card-Krueger work:
estimates of the employment effect of the New Jersey minimum wage increase from the payroll data lead to the opposite conclusion from that reached by CK. Nor is he convinced by another Neumark-Wascher study that found
"no compelling evidence" that minimum wages help in the fight against poverty. A higher minimum wage...generates tradeoffs with respect to the incomes of poor and low-income families. Some families gain and others lose.
Nor is he convinced by the Neumark-Nizalova study that found adverse long-run effects of the minimum wage:
The evidence indicates that even as individuals reach their late 20's, they work less and earn less the longer they were exposed to a higher minimum wage, especially as a teenager.
Nor is he convinced by the Abowd-Kramarz-Margolis study that reported
movements in both French and American real minimum wages are associated with mild employment effects in general and very strong effects on workers employed at the minimum wage.
To me, Gene looks like a doctor prescribing a drug relying on a single controversial study that finds no adverse side effects, while ignoring the many reports of debilitating results.
gregmankiw.blogspot.com 
And in addition to the questions about the data themselves, the Card Kruger study studied large chains, not very small chains or independent restaurants, which might be more vulnerable to the increase in the minimum wage than the large chains are.
And even if their theory, and the data supporting it, about labor shortages due to monopsony employers keeping the wage below the market clearing wage, being cured by mandated higher wages, and so total employment growing because of the higher minimum wage was true, it would hardly apply in times of high unemployment. We are not facing labor shortages for low end labor except in relatively narrow areas. And it didn't even attempt to cover "living wage" laws, but instead more modest increases. |
