Minimum Wage Increases and Employment in the U.S. Restaurant Sector: A Synthetic Control Analysis of 2018-2022 State-Level Policy Variation

This study investigates minimum wage policy effects on restaurant sector employment and hours worked within the context of labor economics and public policy, an area of growing scientific importance given its implications for minimum wage policy design and worker income support programs. Using synthetic control method with difference-in-differences verification using Bureau of Labor Statistics Quarterly Census of Employment and Wages data, we examine wage-floor-induced labor cost increases prompting employer substitution of capital for labor and reduction of low-wage employment in 48 state-level panels from 2014-2022 (quarterly observations, n = 1,536) drawn from U.S. states that implemented minimum wage increases of $1.00 or more between 2018 and 2022. Results indicate that a $1.00 minimum wage increase is associated with a 1.8% reduction in restaurant employment and a 2.4% reduction in total hours worked, with effects concentrated in limited-service establishments (p = 0.012), with 1.8% employment reduction per $1.00 increase as the primary quantitative benchmark. Concordance between primary and confirmatory measurement approaches exceeded 93%, validating the analytical framework. These findings contribute empirically to labor economics and public policy and carry actionable implications for the design of programs and policies targeting minimum wage policy design and worker income support programs.