Category Archives: Minimum Wage

Regional Impacts of a Minimum Wage Hike: A Pennsylvania Case Study

Source: Shannon Brobst, Regional Financial Review, May 2018
(subscription required)

Eighteen U.S. states and 20 cities rang in 2018 with increases in their minimum wage, bringing back into the spotlight the debate about whether to raise the federal minimum, which has remained at $7.25 since 2009 (see Chart 1). The question of whether it should be increased receives many different answers from Republicans, Democrats, economists and non-professional observers. Some argue that increasing the cost of labor hurts the economy because it could lead to jobs cuts for low-paid workers. Raising the minimum wage increases businesses’ labor costs, and thus, the cost of producing a good or service. Higher production costs may cause employers to lay off workers in order to contain costs and remain profitable, and could cause marginally profitable small or struggling businesses to close. Others counter this argument stating that a higher minimum wage helps the economy by boosting incomes and does not materially affect employment. This paper examines the positive and negative effects of raising the minimum wage from $7.25 to $12 and $15 in Pennsylvania and discusses policy implications at the local and federal levels.

The erosion of the federal minimum wage has increased poverty especially for black and Hispanic families

Source: Ben Zipperer, Economic Policy Institute, Economic Snapshot, June 13, 2018

Higher wages were a key plank of the 1968 Poor People’s Campaign to reduce poverty. But over the last five decades the real (inflation-adjusted) value of the minimum wage—a key tool in the fight against poverty—has steadily eroded. Minimum wage increases have been too infrequent to keep up with inflation, let alone raise the real value of the minimum wage above where it was in 1968. While a full-time minimum wage worker in 1968 would have earned $20,600 a year (in 2017’s dollars), a worker paid the federal minimum wage in 2017 could only earn $15,080 working full time. Figure A compares these full-time minimum wage incomes to poverty thresholds for different family sizes and shows that, today, a single parent of one child would be consigned to poverty if that parent earned the federal minimum wage.

Grand Theft Paycheck: The Large Corporations Shortchanging Their Workers’ Wages

Source: Philip Mattera, Good Jobs First and Jobs With Justice Education Fund, June 2018

From the press release:
A new report finds that many large corporations operating in the United States have boosted their profits by forcing employees to work off the clock, cheating them out of required overtime pay and engaging in similar practices that together are known as wage theft.

The detailed analysis of federal and state court records shows that these corporations have paid out billions of dollars to resolve wage theft lawsuits brought by workers. Walmart, which has long been associated with such practices, has paid the most, but the list of the most-penalized employers also includes Bank of America, Wells Fargo and other large banks and insurance companies as well as major technology and healthcare corporations. Many of the large corporations are repeat offenders, and 450 firms have each paid out $1 million or more in settlements and/or judgments….

Related:
Spreadsheet version of Appendix A: Parent companies with $1 million or more in wage theft penalties
Spreadsheet version of Appendix B: 100 largest wage theft lawsuit settlements or verdicts
Spreadsheet version of Appendix C: Wage theft lawsuits with confidential settlements
Spreadsheet list of all lawsuits and enforcement actions analyzed in the report

United Way ALICE Project

Source: United Way, 2018

The United Way ALICE Project provides a framework, language, and tools to measure and understand the struggles of the growing number of households in our communities that do not earn enough to afford basic necessities, a population called ALICE (Asset Limited, Income Constrained, Employed).

Scroll down to view the percent of households in each state – and county – that lived below the ALICE Threshold in 2016. The ALICE Threshold is the bare-minimum economic survival level that is based on the local cost of living in each area.

Hover over the U.S. map below to view state data, click on any state to see a county-by-county analysis of financial instability, and scroll further to compare all states.

Mapping State Interference

Source: Partnership for Working Families, 2018

What is State Interference? While attention focuses on Washington, aggressive corporate and special interests are systematically working at the state level to close critical avenues of power-building for poor people, people of color, women, LGBTQ individuals, and immigrants. Their strategy: targeting local governments, which provide essential hubs of innovation, protection and progressive political power. The Koch Brothers-backed American Legislative Exchange Council (ALEC), the architect of this strategy, has moved state legislators and courts to gut the ability of local governments in a vast number of states to alleviate unemployment, poverty and residential displacement and to protect their residents from threats to their health, safety and civil rights. In many cases such state interference laws are being used as a tool through which largely white state legislatures both deny cities of color of self-determination and preserve longstanding racial inequities.

To help shed light on this development, we created the interactive map below. Click on any of the nine issues to see which states block local standards and laws on that issue. Click on a state to see whether local authority has been preserved or preempted across all nine issues. For further information, you can click through to the actual text of the statute.

Our partners at Grassroots Change have a companion map that covers issues related to public health. Please visit that site to learn more.

As Wisconsin’s and Minnesota’s lawmakers took divergent paths, so did their economies – Since 2010, Minnesota’s economy has performed far better for working families than Wisconsin’s

Source: David Cooper, Economic Policy Institute, May 8, 2018

From the summary:
Since the 2010 election of Governor Scott Walker in Wisconsin and Governor Mark Dayton in Minnesota, lawmakers in these two neighboring states have enacted vastly different policy agendas. Governor Walker and the Wisconsin state legislature have pursued a highly conservative agenda centered on cutting taxes, shrinking government, and weakening unions. In contrast, Minnesota under Governor Dayton has enacted a slate of progressive priorities: raising the minimum wage, strengthening safety net programs and labor standards, and boosting public investments in infrastructure and education, financed through higher taxes (largely on the wealthy).

Because of the proximity and many similarities of these two states, comparing economic performance in the Badger State (WI) versus the Gopher State (MN) provides a compelling case study for assessing which agenda leads to better outcomes for working people and their families. Now, seven years removed from when each governor took office, there is ample data to assess which state’s economy—and by extension, which set of policies—delivered more for the welfare of its residents. The results could not be more clear: by virtually every available measure, Minnesota’s recovery has outperformed Wisconsin’s.

The following report describes how Minnesota’s and Wisconsin’s economies have performed since 2010 on a host of key dimensions, and discusses the policy decisions that influenced or drove those outcomes.

Key findings include:
– Job growth since December 2010 has been markedly stronger in Minnesota than Wisconsin, with Minnesota experiencing 11.0 percent growth in total nonfarm employment, compared with only 7.9 percent growth in Wisconsin. Minnesota’s job growth was better than Wisconsin’s in the overall private sector (12.5 percent vs. 9.7 percent) and in higher-wage industries, such as construction (38.6 percent vs. 26.0 percent) and education and health care (17.3 percent vs. 11.0 percent).

– From 2010 to 2017, wages grew faster in Minnesota than in Wisconsin at every decile in the wage distribution. Low-wage workers experienced much stronger growth in Minnesota than Wisconsin, with inflation-adjusted wages at the 10th and 20th percentile rising by 8.6 percent and 9.7 percent, respectively, in Minnesota vs. 6.3 percent and 6.4 percent in Wisconsin.

– Gender wage gaps also shrank more in Minnesota than in Wisconsin. From 2010 to 2017, women’s median wage as a share of men’s median wage rose by 3.0 percentage points in Minnesota, and by 1.5 percentage points in Wisconsin.

– Median household income in Minnesota grew by 7.2 percent from 2010 to 2016. In Wisconsin, it grew by 5.1 percent over the same period. Median family income exhibited a similar pattern, growing 8.5 percent in Minnesota compared with 6.4 percent in Wisconsin.

– Minnesota made greater progress than Wisconsin in reducing overall poverty, child poverty, and poverty as measured under the Census Bureau’s Supplemental Poverty Measure. As of 2016, the overall poverty rate in Wisconsin as measured in the American Community Survey (11.8 percent) was still roughly as high as the poverty rate in Minnesota at its peak in the wake of the Great Recession (11.9 percent, in 2011).

– Minnesota residents were more likely to have health insurance than their counterparts in Wisconsin, with stronger insurance take-up of both public and private health insurance since 2010.

– From 2010 to 2017, Minnesota has had stronger overall economic growth (12.8 percent vs. 10.1 percent), stronger growth per worker (3.4 percent vs. 2.7 percent), and stronger population growth (5.1 percent vs. 1.9 percent) than Wisconsin. In fact, over the whole period—as well as in the most recent year—more people have been moving out of Wisconsin to other states than have been moving in from elsewhere in the U.S. The same is not true of Minnesota.

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 Wething, National Bureau of Economic Research, NBER Working Paper No. 23532, Issued in June 2017, Revised in May 2018
(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 as much as $11 in 2015 and to as much as $13 in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly wage rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent. Consequently, total payroll for such jobs decreased, implying that the Ordinance lowered the amount paid to workers in low-wage jobs by an average of $74 per month per job 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.

At the Wage Floor: Covering Homecare and Early Care and Education Workers in the New Generation of Minimum Wage Laws

Source: Sarah Thomason, Lea Austin, Annette Bernhardt, Laura Dresser, Ken Jacobs and Marcy Whitebook, Center for Labor Research and Education (UC Berkeley), Center for the Study of Child Care Employment (UC Berkeley), and COWS (UW-Madison), May 2018

From the introduction:
In November 2012, fast-food workers in New York went on strike and the Fight for $15 was born. Over the last five years, the movement has lifted wages for more than 17 million workers across the nation by fighting for and winning numerous minimum wage policies (National Employment Law Project 2016).

Substantial minimum wage increases are underway in California, New York, Oregon, and more than 30 cities and counties around the country. In states and cities covered by them, these new minimum wages will increase earnings for 25 to 40 percent of workers (Reich, Allegretto, and Montialoux 2017; Reich et al. 2016). After four decades of wage stagnation and rising inequality, the movement has delivered real, much needed, and meaningful progress in a remarkably short period of time.

Fast food has been iconic in the discussions of the minimum wage, from the influential mid-1990s research that found no negative employment impact of wage increases in the industry, to the fast-food workers who have walked out on strike in cities across the country in recent years (Card and Kruger 1995). But of course the reach of these wage increases extends well beyond fast food to underpaid workers in multiple industries. The dynamics of minimum wage increases vary across industries based on each industry’s specific structure.

Nowhere are the distinct dynamics more pronounced and challenging than for those employed in human services industries. This paper focuses on an important subset of these workers: those who provide homecare and early care and education services to the very young, people with disabilities, and those who are frail due to age or illness. We explain the pressing need to raise these workers’ wages and the unique structure of their industries that results in a funding squeeze for wage increases—at the root of this is the fact that most families are unable to afford all of the homecare and child care they need, never mind pay enough to ensure that workers earn a living wage, and public human services are chronically underfunded.

These workers provide a critical (but too often unrecognized) public good; as such, we argue that a significant public investment is a necessary part of the solution, both to deliver minimum wage increases to these workers and to cover the significant unmet need for care. We provide background about the shared and divergent challenges in the homecare and early care and education industries, as well as review emerging policy initiatives to fund wage increases for homecare and early care and education workers and identify principles for public policy going forward.

Would universal basic income sap the workforce?

Source: Futurity, February 26, 2018

Would universal basic income cause people to leave the workforce? New research suggests it would not. …. In a working paper, associate professor Damon Jones of the University of Chicago Harris School of Public Policy and assistant professor Ioana Marinescu of the University of Pennsylvania School of Social Policy and Practice (formerly of the University of Chicago) examined the effect of unconditional cash transfers on labor markets using the Alaska Permanent Fund Dividend—a payout from a diversified portfolio of invested oil reserve royalties, established in 1982. They concluded unconditional cash transfers had no significant effect on employment, yet it increased part-time work. ….

Related:
The Labor Market Impacts of Universal and Permanent Cash Transfers: Evidence from the Alaska Permanent Fund
Source: Damon Jones, Ioana Marinescu, National Bureau of Economic Research (NBER), NBER Working Paper No. 24312, February 2018
(subscription required)

From the abstract:
What are the effects of universal and permanent cash transfers on the labor market? Since 1982, all Alaskan residents have been entitled to a yearly cash dividend from the Alaska Permanent Fund. Using data from the Current Population Survey and a synthetic control method, we show that the dividend had no effect on employment, and increased part-time work by 1.8 percentage points (17 percent). Although theory and prior empirical research suggests that individual cash transfers decrease household labor supply, we interpret our results as evidence that general equilibrium effects of widespread and permanent transfers tend to offset this effect, at least on the extensive margin. Consistent with this story, we show suggestive evidence that tradable sectors experience employment reductions, while non-tradable sectors do not. Overall, our results suggest that a universal and permanent cash transfer does not significantly decrease aggregate employment.