Minimum Wage Study Debunks Business Claim

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Some industries are more heavily impacted than others, the researchers found.

Increases in the minimum wage have little impact on small businesses, new research claims.The federal minimum wage in the United States for covered nonexempt employees is $7.25 per hour, although many states have their own laws. Proposals to increase this figure are often met with resistance from small business owners, concerned about how they will be able to afford the rising costs.

But rather than shuttering otherwise healthy businesses, raising the minimum wage winnows the productivity distribution of restaurants, rendering the industry more efficient,' Rao said.'In this way, through exit and entry, the minimum wage shapes the productivity distribution of restaurants in a manner akin to how the emergence of new technologies, exposure to international trade, and recessions.

 

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