by Jim Rose in applied price theory, labour economics, minimum wage, personnel economics, politics - USA Tags: living wage

In the hoohah over whether minimum wages kill jobs, we sometimes miss how they *change* jobs. Case in point: https://t.co/Oal7s1AhGr — Lydia DePillis (@lydiadepillis) January 12, 2016

Recent field research in San Francisco and North Carolina restaurants found that after San Francisco living wage increase, managers were pickier about whom they hire, because they want workers to be worth the higher cost. The San Francisco minimum wage is now $12.25, and all employers are required to offer paid sick days and contribute to their employees’ health insurance.

Source: How worker-friendly laws changed life as a server in San Francisco restaurants – The Washington Post.



The study is useful because of instead of studying the myths and realities about how a higher minimum wage somehow motivates workers to be more productive and offset part or all of its cost to employers, the study investigates how the minimum wage, a living wage, affects hiring standards.

Employers of low skilled, low-wage workers look for workers who are friendly and reliable. As the study concedes, you can teach people the skills they need as long as they are friendly and reliable.

In San Francisco, recruits not only have to be friendly and reliable, they are expected to have experience. The living wage shuts out inexperienced and new workers, which promotes social exclusion.

Minimum wage workers in San Francisco are noticeably older and better educated than those in North Carolina and recruited after more intensive sorting and screening against the hiring standards for the vacancy:

Rather than viewing servers as essentially interchangeable labourers who can be quickly and easily trained if they possess a modicum of personal hygiene and a friendly personality, employers in San Francisco exhibited a clear description of what a professional server was and the explicit and implicit skills required.

The study did not enquire into what happened to applicants who failed to meet the higher hiring standard induced by the living wage increase. As is standard with the champions of the living wage, they do not want to talk about those excluded by the living wage rise.