Wage and Employment Impacts of a Citywide Minimum Wage

Abstract

A citywide minimum wage of $8.50 was implemented in San Francisco in February 2004. To estimate the effects of this policy, we surveyed and compared restaurants in San Francisco and in the East Bay before and after the new policy. Employers with fewer than ten employees are phased into the new minimum over a two-year period, creating an additional dimension of comparison. Results suggest that the policy increased wages significantly among covered restaurants and compressed wages. Comparisons with the control groups provided no evidence of employment loss or increased business closure among affected firms.