The Latest Restaurant Minimum Wage Study Doesn't Even Make Sense Internally

From Tim Worstall. He responds to a report that says jobs losses are small. Excerpt:

"I would give some marks though as the site does post the report itself. Which contains this:

Even when restaurants have raised prices in response to wage increases, those price increases do not appear to have decreased demand or profitability enough to sizably or reliably decrease either the number of restaurant establishments or the number of their employees. Although minimum wage increases almost certainly necessitate changes in restaurant prices or operations, those changes do not appear to dramatically affect overall demand or industry size. Furthermore, there is strong evidence that increases in the minimum wage reduce turnover, and good reason to believe that it may increase employee productivity as well.

It’s just not possible for both of those things to be true, that employment hasn’t been affected but that productivity has risen. Because productivity is the amount of labour you’re using to do something.

Think of it this way: we need to use 10 people to make 100 hamburgers an hour. OK, now we magic up some method of increasing the productivity of those workers. Use pre-washed lettuce and pre-sliced buns. Just hire faster and better people. Make the burgers simpler, whatever. Now we need 5 people to make 100 burgers an hour. That’s our rise in productivity.

It is, obviously, impossible that that rise in productivity has not affected the amount of labour we’re using. If we still only need 100 hamburgers an hour then obviously we are using half the labour to make them. But say that we can sell more burgers? 200 an hour? Great, we’ll still be using 10 people then. But that’s still a change in labour demand: because before the productivity rise we would have needed 20 people to make 200, now we only need 10.

It simply is not possible that the minimum wage affects productivity and does not also affect labour demand. At which point of course we can pretty much ignore the rest of the paper. Which, given that it tries to tell us what we already know isn’t a bad idea anyway. Moderate minimum wage rises don’t seem to have all that much effect on anything and large ones might. Given that that’s the general consensus on the subject why bother to investigate further?"