(p. A17) “There’s only so much you can charge for tamales,” the owner of a small eatery said in 2015 to explain one reason he was closing.
For some empirical backup, consider an April [2017] study from Michael Luca at Harvard Business School and Dara Lee Luca at Mathematica Policy Research. They used Bay Area data from the review website Yelp to estimate that a $1 minimum-wage hike leads to a 14% increase in “the likelihood of exit for a 3.5-star restaurant.”
Put differently, San Francisco’s minimum wage experiment may be dangerous for your favorite white-tablecloth restaurant–the kind of place where the food is exquisite and can command a premium–but it’s downright deadly for your local white-apron diner.
For the full commentary, see:
Michael Saltsman. “The Minimum Wage Eats Restaurants; A San Francisco ex-owner says: ‘There’s only so much you can charge for tamales.’.” The Wall Street Journal (Weds., May 9, 2017): A17.
(Note: bracketed year added.)
(Note: the online version of the commentary has the date May 9, 2017,)
The Luca and Luca paper, mentioned above, is:
Luca, Dara Lee and Luca, Michael. “Survival of the Fittest: The Impact of the Minimum Wage on Firm Exit.” (April 2017). Harvard Business School NOM Unit Working Paper No. 17-088.