Minimum Wage Effects and Monopsony Explanations J C W C

Impacts of Minimum Wage on Exposed Groups and Areas To provide further context for the substantial scope of these policies, we deploy two commonly- applied minimum wage metrics: the ratio of the minimum wage to the median wage and the fraction of workers earning less than the upcoming minimum wage (the ”bite”). [...] The results in Table 4, when multiplied by the 0.3 labor share of costs in fast food, suggest that McDonald’s passed about half of the minimum wage-related labor cost increases to prices in the period through 2019, in the full and no-local samples.32 The combination of incomplete pass-through to prices and no disemployment effect calls for fur- ther explanation. [...] The Pandemic and its Aftermath We next consider the impact of minimum wage changes during and after the pandemic, when minimum wages increased to $15/hour.33 Panel A of Figure 6 shows how fast food employment evolved, on average, in the treated counties of California and New York versus in the donor pool counties, through the end of 2022. [...] We use the estimated coefficients from these regressions to pre- dict the outcomes in the donor counties and the treated county (free of any impact of the minimum wage). [...] We calculate the difference between the treated county residuals and the weighted average of the donor pool county residuals, using the weights we estimated in the first step.