Category Archives: Minimum Wage

Seattle’s Minimum Wage Experience 2015-16

Source: Michael Reich, Sylvia Allegretto, and Anna Godoey, University of California – Berkeley, Institute for Research on Labor and Employment, Center on Wage and Employment Dynamics (CWED), June 2017

From the abstract:
This brief on Seattle’s minimum wage experience represents the first in a series that CWED will be issuing on the effects of the current wave of minimum wage policies—those that range from $12 to $15. Upcoming CWED reports will present similar studies of Chicago, Oakland, San Francisco, San Jose and New York City, among others. The timing of these reports will depend in part upon when quality data become available. We focus here on Seattle because it was one of the early movers. …. Our results show that wages in food services did increase—indicating the policy achieved its goal—and our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13. …

Related:
Press Release

Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle
Source: Ekaterina Jardim, Mark C. Long, Robert Plotnick, Emma van Inwegen, Jacob Vigdor, Hilary WethingNBER Working Paper No. 23532, June 2017
(subscription required)

From the abstract:
This 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 $11 per hour in 2015 and to $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.

Five Flaws in a New Analysis of Seattle’s Minimum Wage
Source: Rachel West, Center for American Progress, June 28, 2017

A team of faculty and students at the University of Washington was tasked with assessing how Seattle’s 2014 minimum wage ordinance, which is gradually raising the city’s minimum wage to $15 per hour, is affecting low-wage workers. This week, the group released a working paper—without peer review—that looks at the ordinance’s first two phases, under which the minimum wage for most workers increased from $9.47 to $11 per hour in 2015 and then to $13 per hour in 2016.

Methodological flaws plague the group’s approach, causing them to draw conclusions wildly out of step with dozens of studies of similarly sized wage increases cited by both critics and proponents of higher minimum wages. The vast majority of rigorous, credible studies conclude that higher minimum wages have appreciably boosted workers’ earnings with little or no effects on employment. By contrast, the University of Washington researchers conclude that higher minimum wages not only reduced employment and hours worked in Seattle, but that the costs of the wage hike outweigh the benefits for the average low-wage worker—a finding at odds with the conclusions of even the most skeptical mainstream researchers. At the same time, the study’s results suggest—implausibly and largely inexplicably—that the wage hike to $13 per hour caused substantial growth in jobs paying more than $19 per hour in the restaurant industry. That’s just one of several questionable results that should give readers serious pause…..

Seat­tle and the (Method­ol­ogy of the) Eco­nom­ics of Min­i­mum Wage
Source: Ben­jamin Sachs, OnLabor blog, June 26, 2017

….Noam Scheiber also has a good story on the UW pa­per which lays out a cri­tique worth men­tion­ing here. In sum, the em­ploy­ment ef­fects iden­ti­fied by the UW study might be due, not to Seat­tle’s min­i­mum wage in­crease, but to a boom­ing job mar­ket in which high-wage jobs are re­plac­ing low-wage jobs. On this the­ory, the em­ploy­ment “losses” in the low-wage sec­tor that the UW study re­ports would ac­tu­ally just be peo­ple mov­ing from low- to high-wage em­ploy­ment. …

How a Rising Minimum Wage Affects Jobs in Seattle
Source: Norm Scheiber, New York Times, June 26, 2017

Seat­tle and the Eco­nom­ics of Min­i­mum Wage
Source: Ben­jamin Sachs, OnLabor blog, June 26, 2017

….There are, as al­ways, caveats. First, the Wash­ing­ton pa­per has yet to be sub­ject to peer re­view – it was re­leased on­line as an NBER work­ing pa­per. Sec­ond, an­other re­cent study – this one from Berke­ley – found that the Seat­tle or­di­nance “raises pay with­out cost­ing jobs.” As FiveThir­tyEight also re­ports, the Berke­ley study fo­cused ex­clu­sively on the fast food in­dus­try, and the Wash­ing­ton study it­self found no em­ploy­ment ef­fects of the min­i­mum wage hike on the restau­rant in­dus­try. One pos­si­bil­ity, then, is that the Wash­ing­ton study’s broader fo­cus is pick­ing up ef­fects that are missed by the (more tra­di­tional) fo­cus on the restau­rant in­dus­try. Many econ­o­mists, in­clud­ing Jared Bern­stein, how­ever, de­fend the method­olog­i­cal de­ci­sion to fo­cus a min­i­mum wage study on restau­rants. There are also, as al­ways, ad­di­tional method­olog­i­cal crit­i­cisms of the Wash­ing­ton study. (EPI has a press re­lease and pa­per that iden­ti­fies a num­ber of these con­cerns.)

Then there is an im­por­tant caveat in the other di­rec­tion: Seat­tle might be a city in the best po­si­tion to ab­sorb min­i­mum wage in­creases, which means – if the Wash­ing­ton study is right – that the em­ploy­ment ef­fects could be even stronger else­where. ….

The “high road” Seattle labor market and the effects of the minimum wage increase – Data limitations and methodological problems bias new analysis of Seattle’s minimum wage increase
Source: Ben Zipperer and John Schmitt, Economic Policy Institute, June 26, 2017

From the summary:
A team of researchers at the University of Washington has released an analysis of the economic impacts of the 2015 and 2016 increases in the Seattle minimum wage. The study, Jardim et al. (2017), looks at the first two stages of a phased-in set of increases that will eventually take the minimum wage in the city to $15.00 per hour. The authors of the study argue that they find large job losses associated with these first two rounds of increases, in which the minimum wage for most workers rose from $9.47 per hour to $11.00 per hour in April 2015 and then to $13.00 per hour in January 2016.

The authors’ analysis, however, suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all. One initial indicator of these problems is that the estimated employment losses in the Seattle study lie far outside even those generally suggested by mainstream critics of the minimum wage (see, for example, Neumark and Wascher [2008])—as the authors themselves acknowledge.

In this report, we describe the most important shortcomings in the new analysis and make suggestions for how the researchers can attempt to correct for these problems in future iterations of their long-term study of the Seattle minimum wage.
See also: press release

The Steal: The Urgent Need to Combat Wage Theft in Retail

Source: Amy Traub, Dēmos, 2017

From the summary:
Retailers put a great deal of resources into dealing with theft. They install security cameras, affix anti-theft tags to merchandise, and hire guards to protect stores. Signs warn that shoplifters will be prosecuted to the fullest extent of the law. And yet another type of theft in the retail sector receives far less attention, even though it is equally, if not more pervasive in our economy: employers stealing pay they legally owe to their workforce.

Key Facts
– Just one form of wage theft is equivalent to the value of all merchandise lost to shoplifting nationwide.
– By paying less than the legal minimum wage, employers steal an estimated $15 billion every year. This compares to an estimated $14.7 billion lost annually to shoplifting.

– Despite the pervasiveness of wage theft, retailers spent 39 times more on security than the entire Department of Labor budget for enforcing minimum wage standards.
– In 2015, retailers spent an estimated $8.9 billion on security. This compares to $227.5 million budgeted for the Department of Labor’s Wage and Hour Division to enforce wage standards.

– Shoplifters can wind up in jail, but federal penalties for wage theft are not much of a deterrent—even when millions of dollars are stolen.
– If a shoplifter steals more than $2,500 in merchandise, they can face felony charges in any state in the country. The greatest civil federal penalty for wage theft is repaying the amount in stolen wages and an equal amount in liquidated damages. Even for repeat or willful violations, the maximum penalty is $1,100.

– Wage theft has disastrous consequences for workers, families, and the public.
– Minimum wage violations cut into the paychecks of an estimated 4.5 million working people and their families, and drive more than 302,000 families below the poverty line.
– In the retail industry alone, 358,000 workers are cheated by minimum wage violations.

Workers in All 50 States Will Need $15 an Hour by 2024 to Afford the Basics

Source: Maya Pinto, National Employment Law Project (NELP), Fact Sheet, May 2017

From the overview:
Think the $15 minimum wage is just a New York and California thing? Cost of living data from the Economic Policy Institute shows that in all fifty states—in both rural and urban areas—$15 an hour is the minimum wage that a single adult working full-time will need by 2024 to cover basic living expenses—including rent, food, transportation, health care, and taxes. And workers in expensive regions, or workers with children, will need even more. The Raise the Wage Act would increase the federal minimum wage to $15 an hour by 2024.

Hourly Living Wage in 2024, Fifty States and the District of Columbia
In a new report, NELP Senior Researcher Maya Pinto charts projected hourly living wages by 2024 for rural and urban workers across the country, showing that living wages will be clustered above the $15 mark by the time the Raise the Wage Act would go into effect….

Related:
Why Eliminating the Subminimum Wage for Tipped Workers Will Address Inequality: A Resource Guide
Source: NELP & and Restaurant Opportunities Center (ROC), Fact Sheet, April 2017

There is growing national momentum for raising pay for the nation’s millions of tipped workers such as restaurant servers, food delivery workers, and many others at the heart of industries like tourism and hospitality. Under current federal law, their minimum wage has been frozen at a meager $2.13 per hour since Bill Clinton was president. While employers are supposed to make up the difference when tips are not enough to bring a worker up to the full minimum wage, in practice such tracking is difficult and compliance is spotty.

Why America Needs a $15 Minimum Wage
Source: NELP & the Economic Policy Institute, Fact Sheet, April 26, 2017

The federal minimum wage is just $7.25 and has not increased since 2009. The Raise the Wage Act of 2017 would gradually raise the federal minimum wage to $15 an hour by 2024, lifting pay for tens of millions of workers and reversing decades of growing pay inequality.

The Path to a Fair and Inclusive Society: Policies that Address Rising Inequality

Source: Justin Steil, Stephen Menendian, Samir Gambhir, University of California, Berkeley – Haas Institute for a Fair and Inclusive Society, Policy Brief, 2017

From the summary:
A major policy brief from the Haas Institute for a Fair and Inclusive Society offers a proven roadmap to end extreme inequality in the United States. The brief, entitled “The Path to a Fair and Inclusive Society: Policies that Address Rising Inequality,” names six basic solutions to tackle what may be the greatest problem of the 21st Century.

These solutions include:
-increasing the minimum wage
-expanding the Earned Income Tax
-building assets for working families
-investing in early childhood education
-making tax code more progressive
-ending racial segregation

Evidence from a Minimum Wage Experiment

Source: John J. Horton, New York University – Leonard N. Stern School of Business, January 10, 2017

Firms posting job openings in an online labor market were randomly assigned minimum hourly wages. When facing a minimum wage, fewer firms made a hire, but those workers they did hire were paid a higher wage. However, the reduction in hiring was not large, even at the highest minimum wage imposed. In contrast, minimum wages substantially reduced hours-worked, across cells. Firms facing a higher minimum wage also hired more productive workers, which can explain, in part, the reduction in hours-worked: with more productive workers, projects were simply completed in less time. This labor-labor substitution margin of adjustment would presumably be less effective in equilibrium, if all firms sought out more productive workers. However, using the platform’s imposition of a market-wide minimum wage after the experiment, I find that many of the experimental results also hold in equilibrium, including the labor-labor substitution towards more productive workers.

Undervalued and underpaid in America: The deck is stacked against millions of working women

Source: Elyse Shaw, Ariane Hegewisch, Emma Williams-Baron, Barbara Gault, Oxfam and the Institute for Women’s Policy Research (IWPR), November 2016

From the summary:
The gender segregation of the workforce (in the US and globally) has meant, in general, that women are concentrated in jobs that pay lower wages. The bad news is that it’s getting worse for women. In the next decade, low-wage women’s jobs will increase at one and a half times the rate of all other jobs. Even more women will be faced with the need to take jobs that undervalue their education and skills, undercompensate their contributions, and exact heavy physical and emotional costs.

This study explores the millions of low-wage jobs where women are concentrated. These “low-wage women’s” jobs meet four criteria: most workers are women; the median wage is under $15 an hour; at least 100,000 women do the job; and the number of jobs will grow in the next 20 years.

We found 22 low-wage women’s work jobs; of the 23.5 million workers doing these jobs, 81 percent are women (19 million). And they are a big segment of the larger workforce: they account for over a quarter of all women’s employment, and 64 percent of women’s low-wage employment.
Related:
Abstract
Executive Summary

Vulnerabilities of Low-Wage Workers and Some Thoughts on Improving Workplace Protections: The Experience of the Workplace Justice Project

Source: Luz M. Molina, Andrea Agee, Erika Zucker, Loyola University New Orleans College of Law Research Paper No. 2016-12, August 7, 2016

From the abstract:
This article explores the landscape of low-wage work in the South and the experience of the Workplace Justice Project at the Loyola University New Orleans College of Law’s Stuart H. Smith Law Clinic and Center for Social Justice. It focuses on the history of the Project as a response to the influx of low-wage, primarily Hispanic, workers, that came to New Orleans in the months and years after Katrina to help with the re-building of the city.

21 States & Localities Approved Minimum Wage Increases in 2016

Source: National Employment Law Project (NELP), Press Release, December 15, 2016

The Fight for $15 continued to accelerate in 2016 – just four years after it began – winning major minimum wage victories from coast to coast. The movement, led by fast-food and other low-wage workers, grew in scale and influence in 2016, with 21 states, cities and counties raising pay for 11.8 million workers. New campaigns seeking to raise pay for 8 million more workers in at least 13 states and cities are teed up for 2017 and 2018.

When combined with increases approved in recent years, on New Year’s Day 2017, workers in at least 40 states, cities and counties will receive raises – followed later in 2017 by raises for workers in another 19 states and cities. Below are highlights of 2016’s minimum wage wins and new campaigns moving forward in 2017 and 2018:

In 2016, a total of 21 states and localities approved minimum wage increases (see Table 1)…..
On or about New Year’s Day, 40 states and localities will increase their minimum wages (Table 3)…..
21 cities and counties will raise their wage floors on New Year’s Day…..
Later in 2017, 19 additional states and cities will increase their minimum wages (Table 4)….
At least 13 more states, cities and counties are launching or continuing campaigns for minimum wage increases of up to $15 over the next two years (Table 5)…..

Minimum wage increases by US states fuelled earnings growth in low-wage jobs

Source: Sandra Black, Jason Furman, Laura Giuliano, Wilson Powell, Vox, December 2, 2016

Over the past three years, 18 states plus the District of Columbia have implemented minimum wage increases, joining ten other states that have raised their minimum wages at least once since the last Federal increase in 2009. This column examines the impact of the more recent state increases on wages, weekly earnings, and employment among workers in the low-wage leisure and hospitality Industry. A comparison with states with no minimum wage increase since 2009 suggests that the recent legislation contributed to substantial wage increases with no discernible impact on employment levels or hours worked…..