A Reanalysis of the Effect of the New Jersey Minimum Wage Increase
on the Fast-Food Industry with Representative Payroll Data

Alan B. Krueger and David Card

ABSTRACT

This paper re-examines the effect of the 1992 New Jersey minimum wage
increase on employment in the fast-food industry.  We begin by
analyzing employment trends using a comprehensive new data set derived
from the Bureau of Labor Statistics's (BLS's) ES-202 data file.  Both
a longitudinal sample and a repeated-cross-section sample drawn from
these data indicate similar or slightly faster employment growth in
New Jersey than in eastern Pennsylvania after the rise in New Jersey's
minimum wage, consistent with the main findings of our earlier survey.
We also use the ES-202 data to measure the effects of the 1996
increase in the federal minimum wage, which raised the minimum wage in
Pennsylvania but not in New Jersey.  We find no indication of relative
employment losses in Pennsylvania.  In light of these findings, we
re-examine employment trends in the sample of fast-food restaurants
assembled by the Employment Policies Institute (EPI) and David Neumark
and William Wascher.  The differences between this sample and both the
BLS data and our earlier sample are attributable to a small set of
restaurants owned by a single franchisee who provided the original
Pennsylvania data for a 1995 EPI study.  We also find that employment
trends in the EPI/Neumark-Wascher sample are strikingly different for
firms that reported their data on a weekly, biweekly or monthly basis,
possibly because of seasonal factors.  Controlling for the systematic
effects of the varying reporting intervals, the combined
EPI/Neumark-Wascher sample shows no difference in hours growth between
New Jersey and Pennsylvania.