$15 Minimum Wage Policies: Early Evidence
Friday, Jan. 5, 2018 10:15 AM - 12:15 PM
- Chair: Alan Krueger, Princeton University
The New Higher Minimum Wages: Effects in Seven Cities
AbstractDozens of cities and eight states throughout the U.S. have enacted bold policies that will gradually phase in minimum wages in the $12 to $15 range over the next several years. These policies will have much larger bites than previous minimum wage increases. We examine early evidence on the wage and employment effects of these policies in seven large cities that have a) already exceeded the $10 level, and b) for which we will have sufficient post-treatment data by late 2017: Chicago, Los Angeles, Oakland, San Francisco, San Jose, Seattle and Washington, DC. We use only publicly-available data or data that is currently available to all researchers: the Quarterly Census of Employment and Wages for counties and cities. Our methods include a) comparisons of restaurant pay and employment trends with surrounding or adjoining counties and b) applying the synthetic control approach using donor counties. For the nearby county estimator, we examine whether trends are parallel in the pre-treatment period. For the synthetic control estimator, we use as long a training period as the available data allow and examine the robustness of our results to the length of this period. We also pay special attention to possible wage spillover issues with the donors, to whether the synthetic control provides a good-enough fit with the treatment city, and to tests of significance. To avoid contamination effects, our potential sample of donor counties varies for each city, depending on whether the city indexed its minimum wage in prior years and state policy. Our results suggest a range of treatment effects on wages and employment among the seven cities. When we pool the results across the seven cities, we find significantly positive effects on wages and small effects on employment, consistent with many previous studies.
Minimum Wage Increases, Wages, And Low-wage Employment: Evidence from Seattle
AbstractThis paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to as much as $11 per hour in 2015 and to as much as $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.
- J3 - Wages, Compensation, and Labor Costs