Cornell University: Minimum wage hike boosts customer experience.
ENPNewswire-September 1, 2021--Cornell University: Minimum wage hike boosts customer experience
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Release date- 31082021 - Cornell University: The ongoing debate over raising the national minimum wage generally focuses on the negative impact it would have on employers, but a new study finds it has a positive effect on a different group: consumers.
A research team that includes Vrinda Kadiyali, the Nicholas H. Noyes Professor of Management in the Samuel Curtis Johnson Graduate School of Management, at the Cornell SC Johnson College of Business, explored a path less traveled in the minimum wage debate - the potential positive impact on customer service.
Exploiting a natural experiment condition in Santa Clara County, California, the group was able to compare reviews of restaurants where the minimum wage increased versus those where the wage was unchanged. The group found an improvement in the perceived service quality of those restaurants where the wage rose, including reduced negative discussion of the courtesy and friendliness of workers.
Their paper, 'The Impact of Increase in Minimum Wages on Consumer Perceptions of Service: A Transformer Model of Online Restaurant Reviews,' published Aug. 25 in the journal Marketing Science.
'Our data show that, for a particular class of restaurants, consumers benefit from an increase in [minimum] wage because employees are motivated and owners are motivated to provide better service,' Kadiyali said. 'The discussion around minimum wage has been all around how prices will go up, and consumers will be worse off. But we find, in our research, that consumers are happier with the overall quality.'
Kadiyali's co-authors were Dinesh Puranam, Ph.D. '16, assistant professor of marketing at the University of Southern California's Marshall School of Business; and Vishal Narayan, associate professor of marketing at the National University of Singapore Business School.
For the research, Kadiyali and her collaborators mined data from more than 97,000 online reviews of restaurants in Santa Clara County. In March 2013, the minimum wage in San Jose, California, rose from $8 to $10, while the wage in the county's other seven cities (Cupertino, Los Altos, Milpitas, Mountain View, Palo Alto, Santa Clara and Sunnyvale) was unchanged. Reviews from the 12 months before and the 12 months after the wage increase, posted on a popular online review site, were analyzed.
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