1993 · National Bureau of Economic Research
Minimum Wages and Employment: A Case Study of the Fast Food Industry in New Jersey and Pennsylvania
Verdict
SCIENTIFIC
The study follows the scientific method and does not operate inside a theoretical framework. The verdict is scientific.
1·Study methodology · no theoretical framework
SCIENTIFIC
Follows the scientific method. No theoretical framework attached.
2·Paradigm · Basic Epidemiological Comparison
NOT APPLICABLE
No theoretical framework. The study verdict decides.
How the verdict is decided
This study does not operate inside a theoretical framework. Using hospital records, billing codes, or diagnostic names as labels on visible events is not the same as depending on that framework. The verdict is the study methodology score alone.
1·Study methodology
Did this study test its claim with methods that are independent, falsifiable, and non-circular?
SCIENTIFIC
This paper claims that New Jersey's minimum wage increase from $4.25 to $5.05 per hour did not reduce employment at fast food restaurants, and that employment in New Jersey rose relative to Pennsylvania after the increase. All three tests pass.
Independently Verifiable
Pass
Counting employees and recording wages at fast food restaurants are things anyone can verify by walking through the door.
Falsifiable
Pass
If New Jersey employment had fallen relative to Pennsylvania, the study would have reported that the minimum wage increase reduced jobs.
Non-Circular
Pass
The groups were defined by geography and prior wage levels, and the survey questions were not built from the conclusion they claim to test.
Why
The researchers called fast food restaurants in New Jersey and Pennsylvania before and after New Jersey raised its minimum wage. They asked how many people worked there and what the starting wage was. They called back eight months later and asked the same questions. Then they compared the employment changes between the two states. Every piece of data they collected is something a stranger could verify by visiting a restaurant and counting heads. The groups were defined by state lines and wage levels, not by any test that presupposes a conclusion. If employment had dropped in New Jersey relative to Pennsylvania, the study would have found exactly that and reported it. The design did not filter out a negative result. Nothing in the method assumes the answer before the data arrives.
2·Paradigm · Basic Epidemiological Comparison
The three tests do not apply. There is no theoretical framework.
NOT APPLICABLE
Why
The study counts visible events in defined groups. Employees are counted, wages are recorded, store closures are observed. No theoretical framework is required for any of these observations to exist. The differences-in-differences comparison is arithmetic on those counts. The economic theory that predicts minimum wage increases reduce employment is the claim being tested, not the framework the method depends on. There is no paradigm to score.
From the paper
Our empirical findings challenge the prediction that a rise in the minimum reduces employment. Relative to stores in Pennsylvania, fast food restaurants in New Jersey increased employment by 13 percent.
We successfully interviewed 371 (90 percent) of these stores by telephone in November 1992. Because of a concern that non-responding restaurants might have closed, we hired an interviewer to drive to each of the 39 non-respondents and determine whether the store was still open, and conduct a personal interview if possible.
Employment is set to 0 for the permanently closed stores in Wave 2 but is treated as missing for the temporarily closed stores.