Restaurant scene illustrating the shift from part-time to full-time employment due to minimum wage fluctuations.

Wage Hike Dilemma: Is Your Favorite Restaurant Replacing Full-Time Staff?

Kai Mendoza in Business & Economy September 2025 • 4 min read.

"New research reveals a surprising labor shift following minimum wage increases. Are full-time jobs at risk?"

The impact of minimum wage laws on employment has been a long-standing debate, filled with conflicting studies and passionate opinions. While some argue that raising the minimum wage boosts the economy by increasing consumer spending, others fear that it leads to job losses as businesses struggle to absorb the higher labor costs. The traditional view often focuses on the net change in employment numbers – are there more or fewer jobs after a wage hike?

However, a new study is shaking up this conventional wisdom by looking beyond simple job counts. Instead of just asking whether employment increases or decreases, researchers are digging deeper into the types of jobs that are being affected. Their findings reveal a surprising trend: even if overall employment appears stable, restaurants might be strategically shifting their workforce composition from part-time to full-time positions in response to minimum wage increases.

This shift has significant implications for workers, businesses, and policymakers alike. For employees, it could mean more stable work, better benefits, and increased income for those securing full-time roles. But it also raises concerns about reduced opportunities for those seeking part-time work, especially students or individuals needing flexible schedules. For businesses, understanding these labor dynamics is crucial for adapting to changing economic conditions and optimizing their staffing models. And for policymakers, these insights can inform more nuanced minimum wage policies that consider the potential for workforce restructuring.

The Unexpected Twist: How Minimum Wage Affects Job Types

Restaurant scene illustrating the shift from part-time to full-time employment due to minimum wage fluctuations.

Difference-in-differences estimators, a common tool in economics, help isolate the causal effects of a policy change from other factors. This involves comparing the outcomes of a 'treatment' group (e.g., restaurants in a state that increased minimum wage) with a 'control' group (e.g., restaurants in a neighboring state without a wage increase) before and after the policy change.

However, classical methods often only look at average effects across all units in a group. This can obscure important variations. More advanced techniques, like the changes-in-changes (CiC) estimator, try to capture how the entire distribution of outcomes changes, allowing for more complex reactions to the policy.

Classical DiD: Estimates average effects, potentially missing variations within groups.
CiC Estimator: Addresses heterogeneity by analyzing shifts in the entire outcome distribution.
The Innovation: Applies optimal transport theory to handle multivariate (multiple outcome) scenarios, offering a more nuanced analysis.

The researchers in this study introduce a novel approach, using tools from optimal transport theory. This allows them to analyze how the entire landscape of employment changes across both full-time and part-time positions, capturing the intricate relationships between these job types. This approach is particularly valuable because it allows for what economists call 'heterogeneity,' meaning that different restaurants can react differently to the same minimum wage policy. Some might increase full-time hiring while others reduce part-time roles, and the optimal transport method can capture these diverse responses.

Decoding the Data: What This Means for the Future of Work

This new research highlights the importance of moving beyond simple averages when analyzing the effects of economic policies. By using advanced techniques like optimal transport, researchers can uncover hidden shifts in the workforce composition and gain a more complete understanding of how businesses and workers are adapting to changing conditions. As minimum wage debates continue, these insights can help inform more effective and equitable policies that support both businesses and employees.

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This article is based on research published under:

DOI-LINK: https://doi.org/10.48550/arXiv.2108.05858,

Title: An Optimal Transport Approach To Estimating Causal Effects Via Nonlinear Difference-In-Differences

Subject: stat.me econ.em math.st stat.th

Authors: William Torous, Florian Gunsilius, Philippe Rigollet

Published: 12-08-2021

Everything You Need To Know

How do minimum wage increases affect the types of jobs available in restaurants?

Minimum wage increases can lead restaurants to shift their workforce composition. The research indicates that, even if overall employment numbers remain stable, restaurants might opt to change the ratio of full-time to part-time positions. This shift means that while the total number of jobs might not change dramatically, the types of jobs available (full-time versus part-time) could be significantly altered. The study suggests a possible trend of moving towards more full-time roles. This can have substantial impacts on employees, businesses and the overall economy.

What is the difference between 'Classical DiD' and 'CiC Estimator' and how are they used in economic analysis?

Both 'Classical DiD' (Difference-in-Differences) and the 'CiC Estimator' (changes-in-changes) are used to analyze the impact of a policy change. 'Classical DiD' estimates average effects by comparing the outcomes of a 'treatment' group with a 'control' group before and after a policy change, potentially missing variations. The 'CiC Estimator' goes a step further, addressing heterogeneity by analyzing shifts in the entire distribution of outcomes. The CiC attempts to capture the diverse reactions to the policy by examining how the entire landscape of employment changes across both full-time and part-time positions, allowing for more complex reactions to the policy.

How does 'optimal transport theory' improve the analysis of minimum wage effects on employment?

The innovative approach uses 'optimal transport theory' to provide a more nuanced analysis. This method allows researchers to go beyond simple averages and understand the intricate relationships between full-time and part-time positions within the restaurant industry. It helps capture the different reactions that various restaurants might have to a minimum wage policy change, such as increasing full-time hires or reducing part-time roles. This enables a more complete understanding of the workforce composition changes.

What are the potential implications of restaurants shifting from part-time to full-time positions due to minimum wage changes?

A shift from part-time to full-time positions has implications for employees, businesses, and policymakers. For employees, it could mean more stable work, better benefits, and increased income. However, it could also reduce opportunities for those who prefer part-time work, such as students or those needing flexible schedules. Businesses need to understand these labor dynamics to adapt their staffing models. Policymakers can use the insights to create minimum wage policies that support both businesses and employees, considering the potential for workforce restructuring and the resulting impacts.

Why is it important to move beyond simple averages when analyzing the effects of minimum wage policies?

Moving beyond simple averages, as opposed to using more advanced techniques, is crucial because it allows for a more complete understanding of the impact of minimum wage policies. Classical methods might overlook variations within groups, and the usage of new approaches like 'optimal transport theory' helps uncover hidden shifts in workforce composition. This comprehensive analysis helps in understanding how businesses and workers adapt to economic changes. The insights gained from this comprehensive approach allows for the development of more effective and equitable policies.