Category Archives: Minimum Wage

Valuing Our Time: Strengthening New Jersey’s Overtime Law

Source: Nicole Rodriguez, New Jersey Policy Perspective, October 24, 2019

From the introduction:
A prosperous New Jersey depends on the livelihood of all our workers. In fact, the state economy benefits most when workers are able to earn fair pay for all the hours they work while balancing employment responsibilities with family obligations. However, millions of people across the nation, including hundreds of thousands in New Jersey, are not covered by overtime protections and risk being exploited for their time. This is a direct result of federal overtime laws that have eroded over time—and the lack of a strong state overtime law—where far too many workers are exempt from the right to earn time-and-a-half when they work over 40 hours a week.

Currently, some salaried white-collar workers who earn more than $23,660 a year can be legally denied overtime pay. These exempted workers (1) are considered “highly compensated,” earning at least $455 per week ($23,660 per year), (2) have primary office or non-manual duties, and (3) pass the “duties test,” a complicated test of employees’ tasks and responsibilities that establish them as a bona fide executive, manager, or highly trained professional. The federal overtime salary threshold for these exempted workers will increase to $35,568 in 2020, but this still falls significantly short of historical standards.

Most salaried workers are not covered by federal overtime law. Share of full-time workforce who ear less than the federal overtime threshold: 1975 - 62.8%, 2016 - 6.8%. Source: EPI analysis of Current Population Survey Outgoing Rotation Group microdata.

Earnings, EITC, and Employment Responses to a $15 Minimum Wage: Will Low-Income Workers Be Better Off?

Source: Fahad Fahimullah, Yi Geng, Bradley Hardy, Daniel Muhammad, Jeffrey Wilkins, Economic Development Quarterly, OnlineFirst, Published October 16, 2019
(subscription required)

From the abstract:
The District of Columbia will increase its minimum wage to $15 per hour in 2020. The city also provides a local refundable earned income tax credit (EITC) equal to 40% of the federal EITC. Using a computable general equilibrium model, the authors estimate the economic impact of the $15 wage policy. They also use a tax policy microsimulation model to estimate how the city’s EITC interacts with a higher minimum wage. Overall, the authors find that the higher minimum wage will produce significant income gains for most of the city’s low-wage workers, with relatively few job losses. Additionally, they forecast that most city EITC recipients will receive a lower EITC, but higher earnings more than offset the reduced tax credit. The model predicts that this policy change would largely be funded by higher consumer prices, lower firm profits, and higher business productivity. These predictions are subject to important caveats, including a local labor market that is likely inadequately characterized in a model assuming perfect competition. Economic policy makers should therefore use such modeling approaches as a powerful but ultimately imperfect tool.

New York City’s $15 Minimum Wage and Restaurant Employment and Earnings

Source: Lina Moe, James Parrott, Yannet Lathrop, Center for New York City Affairs at The New School and the National Employment Law Project, August 2019

From the press release:
Five years after New York State passed the first of several laws to gradually raise its minimum wage to $15 an hour, New York City’s restaurant industry continues to thrive, with strong growth in restaurant industry employment, wages, and the number of establishments around the city, according to a new report released today by the Center for New York City Affairs at The New School and the National Employment Law Project.

The report’s findings of a prospering restaurant industry are in sharp contrast to the “sky is falling” rhetoric of industry lobbyists who warned of massive job losses, $20 Big Macs, and shuttered restaurants. The report offers a first-of-its-kind assessment of restaurant employment and earnings over the entire period of the city’s historic minimum wage increases, during which the wage floor rose from $7.25 to $15.00 an hour.

The restaurant industry has the highest proportion of workers affected by the minimum wage of any industry. Researchers analyzed comprehensive employment, wage, and restaurant establishment data between 2013 and 2018 to assess the impact of the higher minimum wage on New York City’s restaurant industry. They found that during this period, New York City saw a strong economic expansion of the restaurant industry, outpacing national growth in employment, annual wages, and the number of both limited- and full-service restaurant establishments…..

The Political Theory of Universal Basic Income

Source: Juliana Uhuru Bidadanure, Annual Review of Political Science, Vol. 22, 2019
(subscription required)

From the abstract:
Universal basic income (UBI) is a radical policy proposal of a monthly cash grant given to all members of a community without means test, regardless of personal desert, with no strings attached, and, under most proposals, at a sufficiently high level to enable a life free from economic insecurity. Once a utopian proposal, the policy is now widely discussed and piloted throughout the world. Among the various objections to the proposal, one concerns its moral adequacy: Isn’t it fundamentally unjust to give cash to all indiscriminately rather than to those who need it and deserve it? This article reviews the variety of strategies deployed by political theorists to posit that the proposal is in fact justified, or even required, by social justice. The review focuses mainly on the contemporary normative debate on UBI—roughly dating back to Philippe Van Parijs’s influential work in the 1990s—and is centered on the ideals of freedom and equality.

Exposing Wage Theft Without Fear: States Must Protect Workers from Retaliation

Source: Laura Huizar, National Employment Law Project, June 2019

From the press release:
Social justice movements, such as the Fight for $15, #MeToo, and striking Uber drivers, rely on workers to come forward to assert their rights—but workers who dare challenge an employer’s policies or misconduct know that they will almost certainly face retaliation. Even highly-paid Google workers have been forced to protest retaliation following a mass walkout criticizing Google’s handling of sexual harassment. A new NELP survey of laws in all 50 states and the District of Columbia shows, however, that state laws overwhelmingly fail to provide workers with essential retaliation protections.

In Exposing Wage Theft Without Fear: States Must Protect Workers from Retaliation, NELP offers a first-of-its-kind analysis focusing on how state laws protect—or fail to protect—workers when they challenge wage theft by lodging complaints with employers or government agencies, filing lawsuits, or engaging in public actions, for example…..

Getting poorer while working harder: The ‘cliff effect’

Source: Susan R. Crandall, The Conversation, June 3, 2019

….Given the pressure to earn enough to make ends meet, you would think that low-paid workers would be clamoring for raises. But this is not always the case.

Because so many American jobs don’t earn enough to pay for food, housing and other basic needs, many low-wage workers rely on public benefits that are only available to people in need, such as housing vouchers and Medicaid, to pay their bills.

Earning a little more money may not automatically increase their standard of living if it boosts their income to the point where they lose access to some or all of those benefits. That’s because the value of those lost benefits may outweigh their income gains.

I have researched this dynamic, which experts often call the “cliff effect,” for years to learn why workers weren’t succeeding at retaining their jobs following job training programs. Chief among the one step forward, two steps back problems the cliff effect causes: Low-paid workers can become reluctant to earn more money due to a fear that they will get worse off instead of better…..

The Architecture of a Basic Income

Source: Miranda Perry Fleischer, Daniel Jacob Hemel, University of Chicago Law Review, Forthcoming, Last revised: March 27, 2019

From the abstract:
The notion of a universal basic income (“UBI”) has captivated academics, entrepreneurs, policymakers, and ordinary citizens in recent months. Pilot studies of a UBI are underway or in the works on three continents. And prominent voices from across the ideological spectrum have expressed support for a UBI or one of its variants, including libertarian Charles Murray, Facebook co-founder Chris Hughes, labor leader Andy Stern, and—most recently—former President Barack Obama. Although even the most optimistic advocates for a UBI will acknowledge that nationwide implementation lies years away, the design of a basic income will require sustained scholarly attention. This article seeks to advance the conversation among academics and policymakers about UBI implementation.

Our prior work has focused on the philosophical foundations of a basic income; here, we build up from those foundations to identify the practical building blocks of a large-scale cash transfer program. After canvassing the considerations relevant to the design of a UBI, we arrive at a set of specific recommendations for policymakers. We propose a UBI of $6000 per person per year, paid to all citizens and lawful permanent residents via direct deposit in biweekly installments. We argue—contrary to other UBI proponents—that children and seniors should be included, that adjustments for household size and cost of living should be rejected, that recipients should have a limited ability to use future payments as collateral for short- and medium-term loans, and that the Social Security Administration should carry out the program. We also explain how a UBI could be financed through the consolidation of existing cash and near-cash transfer programs as well as the imposition of a relatively modest surtax on all earners.

Importantly, the building blocks of a UBI do not necessarily determine its outward face. By this, we mean that economically identical programs can be described in very different ways—e.g., as a UBI with no phaseout, a UBI that phases out with income, and a “negative income tax”—without altering any of the essential features. To be sure, packaging matters to the public perception of a UBI, and we consider reasons why some characterizations of the program may prove more popular than others. Our article seeks to sort the building blocks of a UBI out from the cosmetic components, thereby clarifying which elements of a UBI shape implementation and which ones affect only the outward appearance.

The Minimum Wage, EITC, and Criminal Recidivism

Source: Amanda Y. Agan – Rutgers University, Department of Economics, Michael D. Makowsky – Clemson University, John E. Walker Department of Economics, Date Written: September 25, 2018

From the abstract:
For recently released prisoners, the minimum wage and the availability of state Earned Income Tax Credits (EITCs) can influence both their ability to find employment and their potential legal wages relative to illegal sources of income, in turn affecting the probability they return to prison. Using administrative prison release records from nearly six million offenders released between 2000 and 2014, we use a difference-in- differences strategy to identify the effect of over two hundred state and federal minimum wage increases, as well as 21 state EITC programs, on recidivism. We find that the average minimum wage increase of $0.50 reduces the probability that men and women return to prison within 1 year by 2.8%. This implies that on average the effect of higher wages, drawing at least some released prisoners into the legal labor market, dominates any reduced employment in this population due to the minimum wage. These reductions in returns to incarcerations are observed for the potentially revenue generating crime categories of property and drug crimes; prison reentry for violent crimes are unchanged, supporting our framing that minimum wages affect crime that serves as a source of income. The availability of state EITCs also reduces recidivism, but only for women.