A higher minimum wage promotes workplace safety: Evidence from the restaurant industry

The American workplace is distressingly dangerous, with 5,333 workplace deaths and 2.8 million nonfatal injuries and illnesses in 2019. This paper uses a difference-in-differences methodology to exploit staggered changes in the minimum wage from 1992-2016 to demonstrate that an increase in the minimum wage reduces workplace injuries and deaths in the United States restaurant sector, with an elasticity between -0.73 and -1.45. We limit attention to the restaurant sector because minimum wage workers are strongly overrepresented in that sector. Safety violations in routine inspections decline when the minimum wage is increased. These violations are found in domains where the employer is most responsible (e.g., expired fire extinguisher), which suggests that employer behavior is an important mechanism. Additionally, it is possible that the exiting restaurants tend to be more dangerous. Previous research shows that the restaurants which are driven out of business by minimum wage hikes were those that were already close to the margin of exit, and firms that are barely staying afloat before the minimum wage hike may be less likely make long-term investments in safety. Finally, we analyze the manufacturing sector as an additional placebo test. The minimum wage rarely binds for workers in the manufacturing sector, so we should expect that there is only a weak relationship between the minimum wage and accident inspections. This paper ties into a long-standing debate about the wisdom of increasing the minimum wage. Most scholars indicate that raising the minimum wage causes a slight decrease in employment, but there are also papers that find no effect or even a positive effect. The present paper uncovers a new benefit to raising the minimum wage and strengthens the argument that it should be increased even if there is a small detriment to employment.