D.C. restaurants have lost 1,400 jobs in the first half of the year. This loss—the steepest drop since the 2001 recession—follows a significant minimum wage hike.
Data suggests that the D.C. restaurant industry has been unable to absorb the higher cost of labor without reducing employment opportunities. Since mandating a base wage of $10.50 in July 2015 and another increase to $11.50 in July 2016, D.C. has seen employment in the restaurant industry trend downward, for a 3 percent job loss in 2016.
“Cities and states around the country that are considering a hike in their minimum wages to $15 an hour might want to take a look at how that’s working out in the nation’s capitol,” writes Mark Perry of the American Enterprise Institute.
While D.C. has not yet increased its minimum wage to $15, the wage hikes it has implemented have put it well on that path. And, according Perry, even these more modest increases have had negative effects.
Using the neighboring suburbs in Maryland and Virginia as a “natural experiment,” Perry compared the employment rates in D.C., where the minimum wage had been raised, to the rates in states with lower minimum wages—$8.75 and $7.25 respectively.
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He found that these suburbs actually saw an increase in hiring during the same period that D.C. experienced 3 percent job loss. Restaurant employment grew at a 1.6 percent rate for an additional 2,900 jobs.
Despite this troubling comparison, D.C. officials have no plans to reduce the city’s minimum wage. On the contrary, they have added a measure to November’s ballot to increase its minimum wage even further—$15 an hour for non-tipped employees and $5 an hour for tipped.
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