When we last broached this topic, the conclusion was pretty clear: California’s $20 minimum wage reduced employment in limited service restaurants (LSR). Nevertheless, skeptics remain. In this article I will summarize a recent study by the Employment Policy Institute’s new Minimum Wage project showing a fundamental, basic defect in the execrable “research” on this topic from the U.C. Berkeley’s Institute for Research on Labor and Employment (IRLE). We’ve met this crowd before. Their ongoing record of torturing the data until it gives the results they want is truly a sight to behold.
The Minimum Wage Project
These folks spotted a pretty basic error in the IRLE paper. IRLE used non-seasonally adjusted (NSA) data. But, as noted in my previous article, seasonally adjusted (SA) data is readily available from the FRED database at the Federal Reserve Bank of St. Louis. Here’s a summary of the Minimum Wage project findings in one graph.
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That’s a net loss of 5,416 jobs since January, 2024. Just for kicks, I compared NSA and SA data from the BLS. The first graph clearly shows the difference between the two series. The second shows the complete series since 2010. The seasonality is apparent. Employment rises in the summer when young people get summer jobs and many families take their annual vacations. For most people, the last thing they want to do on vacation is cook. Thus, both demand and supply for “meals eaten away from home” rises. (That’s the official designation from the Bureau of Economic Analysis.)
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So, given the patterns of supply and demand, we expect LSR employment to rise between January and August and fall between September and December nearly every year. A major exception is 2020, the COVID pandemic year. I trust the BLS to have done the seasonal adjustment correctly.
Thanks to the folks at the Economic Policy Institute for starting this new project. I’m subscribing right now.
