MARY LOUISE KELLY, HOST:
Here's a trend. Cities around the country have moved to increase the minimum wage for workers at restaurants. Now, in turn, those restaurants have responded by trying to find ways to cut costs or pass the bill on to customers. But there is another unexpected effect of raising the minimum wage. To explain, we are joined by NPR's social science correspondent Shankar Vedantam. Good morning.
SHANKAR VEDANTAM, BYLINE: Good morning, Mary Louise.
KELLY: All right, the suspense is killing me. What is the unexpected side effect?
VEDANTAM: Well, the new research explores hygiene violations in the restaurant industry, specifically looking at Seattle, which has been in the vanguard of raising the minimum wage. So the minimum wage in Seattle went from about $8 an hour in 2010 to about 13 to $15 an hour this year.
I was speaking to Srikant Devaraj at Ball State University in Indiana. Along with his co-author Subir Chakrabarti and Pankaj Patel, Devaraj analyzed the effects of the minimum wage increase on restaurant health and hygiene. Seattle's King County keeps detailed inspection records based on surprise visits from inspectors. Since different parts of King County raise the minimum wage at different times, the economists were able to track the trajectory of violations in Seattle as the minimum wage changed.
SRIKANT DEVARAJ: We find that a dollar increase in minimum wage resulted in a 6.4 percent increase in overall health violations and 15.3 percent increase in less severe violations as a result of the increases.
KELLY: That's a pretty striking set of numbers there, Shankar. So what is the link that they've found?
VEDANTAM: Devaraj and his colleagues think that when restaurants face higher costs, they can do one of two things. They can find ways to pass these costs on to consumers. But, obviously, diners don't like to see this. They might also scale back some services, cutback hours of workers or add additional tasks to staff jobs. As a result, some service issues might start to crop up.
Crucially, the researchers do not find increases in serious health violations that could get a restaurant shut down. In Seattle, these are termed red risk factors. The researchers instead find an increase in less serious violations. I asked Devaraj to give me some examples of these so-called blue violations.
DEVARAJ: Protection from contamination, like things like - insect, rodents, animals, employee cleanliness and hygiene; toilet facilities - whether they were properly constructed, supplied and cleaned; the garbage has been properly disposed of. So these are some of the examples of these blue risk factors.
KELLY: OK. Let me catch up with you. What we're seeing here is the research shows if workers get paid more, to earn the same profit, businesses need to cut on something and where they're cutting is around the edges on hygiene?
VEDANTAM: That seems to be what the research is suggesting. Now, we don't know what the long-term trends are. It could be that over five years, this is going to look very different as the effects of the minimum wage shakeout. It could also be this is the effect of raising the minimum wage.
And one implication is if cities are going to raise the minimum wage, one thing they might want to do is step up inspections of these more minor violations because you can expect that businesses that face higher costs might sometimes seek to cut corners.
KELLY: You know, you could also expect that this might go the other way - that with better pay, morale would go up. People would take greater pride in where they work. They would take better care of the facilities.
VEDANTAM: It certainly could work that way. And maybe it will work that way over the long term. It's also possible that that's happening simultaneous with other factors. So, for example, if a restaurant pays you more but cuts your hours, is your morale going to go up or down?
KELLY: Shankar Vedantam - he joins us regularly to talk about social science research, and he's also host of the podcast Hidden Brain. Thanks, Shankar.
VEDANTAM: Thanks so much.
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