“Taken together, our findings show that independent, potentially vulnerable firms are broadly able to accommodate minimum wage increases through higher revenues. Minimum wage policies have deeper impacts in the restaurant industry where they harm the viability of the least productive firms while benefiting surviving firms through a combination of higher worker retention and new revenues. While in the end the industry is more efficient, with even entering firms mirroring the productivity of survivors, these gains come at the cost of exiting firms and their owners. This divergence in outcomes helps explain why surveys repeatedly show that independent business owners are divided when it comes to minimum wage policy.
“Uncertainty about cost pass-through, and about possibilities of demand reallocation and worker retention likely broaden opposition. Ultimately, higher wage floors raise the earnings of low income workers with the costs borne in part by the small share of owners whose firms shutter, and largely by consumers who finance the revenue increases that offset added wage
costs and leave most business owners no worse off.”