They found an eye-catching exception to the theory that employment falls when the minimum wage rises. Card, for instance, now wants to study what happens when affirmative action is eliminated, as it has been at the University of California. He does not waste time on research he does not consider important and practical. Their minimum-wage research, initiated in the late 1980s, soon after Krueger got his Ph.D. at Harvard and came to Princeton as an assistant professor, seemed important to both of them. Their first studies involved California.
Entrenched theory holds that supply and demand tend to balance each other.
When the minimum wage rises enough, as it did in New Jersey, then demand among employers for minimum-wage workers declines. So when Krueger and Card surveyed fast-food restaurants in New Jersey, compared them with nearby Pennsylvania, where the minimum was unchanged, and found no impact on employment, there was an uproar. They published their study in 1994, just as Krueger started at the Labor Department, where his boss, Robert Reich, was pushing for an increase in the minimum wage, later enacted. Card-Krueger, as they came to be known, were accused by some economists of shoddy research for a political goal and blithe disregard for theory. That is where I really deviate from these people.