Mandated Wage Floors and the Wage Structure: New Estimates of the Ripple Effects of Minimum Wage Laws

Minimum wage laws have become a key political issue, following on the heels of over 130 successful living wage campaigns around the country. In the debates surrounding these mandated wage floors, one recurring issue has been whether the legislation has wider-ranging impacts on wages than the legally-required raises alone. Advocates on both sides of the debate dispute the potential magnitude of 'ripple effects'- the non-mandated raises given by employers to maintain a similar wage hierarchy before and after a change in the wage floor. These ripple effects have the potential to greatly expand the overall impact of mandated wage floors. This study uses data from twenty years of the Current Population Survey to assess the magnitude of ripple effects in the context of variations in minimum wage laws, and looks specifically at the retail trade sector to model the potential magnitude of ripple effects under living wage ordinances, where the 'bite' of the legislation would encompass a larger share of the workforce.ripple effect, wage spillover, wage norms, minimum wage, living wage, wage distribution, retail trade, low wage

Comments on Aaron Yelowitz, "Santa Fe's Living Wage Ordinance and the Labor Market"

In a new study by Yelowitz “Santa Fe’s Wage Ordinance and the Labor Market,” dated September 23, 2005 (published by the Employment Policies Institute) Yelowitz claims to have demonstrated that the Santa Fe living wage ordinance is responsible for significant, negative consequences for Santa Fe’s least educated residents, including a 9.0 percentage point increase in the city’s unemployment rate among such workers. However, he derives these findings through a presentation of evidence that is misleading and incomplete, misusing the available data. We replicate and extend Yelowitz’s model to look at job growth specifically, and, using the same data as Yelowitz, we find that the Santa Fe ordinance did not produce any decline at all in the availability of jobs. Moreover, our estimates suggest that the living wage ordinance did increase earned income for the average worker affected by the ordinance, even if we accept Yelowitz’s estimates on reduced hours of work. In short, even while relying on Yelowitz’s own model and estimates, we find that, to date, the Santa Fe ordinance has succeeded in achieving its main aims: to improve the quality of jobs for low-wage workers in Santa Fe without reducing their employment opportunities.

Did Immigrants in the U.S. Labor Market Make Conditions Worse for Native Workers During the Great Recession?

Did the presence of immigrant workers in the United States labor market—including both documented and undocumented workers—significantly affect conditions for low-wage native workers during the Great Recession of 2008-09?�� Building from the methodology developed by Card (2005), our basic finding is straightforward: the presence of immigrants in the U.S. labor market did not contribute in any significant way to the severe labor market problems faced by native workers during the recession. We do emphasize that our conclusion remains provisional until a broader set of data are brought to bear in investigating the question.

What the debate over raising the federal minimum wage to $15 tells us about US politics and society

Joe Biden’s America Rescue Plan Act was recently passed by Congress, but without the provision to raise the federal minimum wage to $15. Jeannette Wicks-Lim argues that the politics around increasing the federal minimum wage provide a near-perfect microcosm of wider US politics, including a clear articulation of the country’s social hierarchy. She reminds us that current minimum wage policies, including the tip-credit, disproportionately affect women, and especially Black women. Despite a majority of voters supporting raising the federal minimum, she writes, partisanship and lobbying means that Congressional action is unlikely

The Persistence of Racial Inequality: The Earnings Gap Among Women from 1979-2016

This study identifies a significant racial earnings gap among women that has persisted, essentially unchanged, from 1979 to 2016, using annual earnings data from the Annual Social and Economic supplement of the Current Population Survey. Different from past studies, I integrate into this study’s method of analysis how racism has caused Black and White women to interact with the labor market in profoundly different ways. In particular, Black married women have historically been much more active in the labor force than White married women. To account for this expression of White privilege—distinctive in this period to married mothers in particular—I examine the earnings gap by household type. This approach reveals how a roughly 120 percent White earnings premium has persisted among single mothers, single women without children, and among married women without children from 1979 to 2016, basically unchanged. Married White mothers, on the other hand, dramatically increased their labor force activity over these years, so that their LFPR nearly matches that of married Black mothers. By 2016, the White earnings premium among married mothers also reached 120 percent. I conclude that the degree to which the consequences of racism and White privilege show up in women’s access to earnings is large, and largely unchanged, since 1979

The Work Environment Index: Technical Background Paper

The vast majority of Americans work for a living. The track record of different states varies widely when it comes to providing decent opportunities for working people. The Work Environment Index (WEI) captures these differences and provides a basis for evaluating how well each state does in creating an economy that supports its working population. The purpose of this article is to detail the construction of the WEI and to explain the design of the Index. This paper serves as a technical companion to the report Decent Work In America: The 2005 Work Environment Index. Many factors contribute to a good environment for working people: quality jobs, adequate opportunities for employment, basic social protections, and being treated fairly. The WEI is a composite measure of these different dimensions and provides a basis for comparing the quality of the work environment in all 50 states and the District of Columbia. The WEI has multiple objectives: 1) to capture and quantify the various dimensions of the work environment on a state-by-state basis. 2) to provide a direct, relatively transparent, and easy-to-understand measurement that is firmly rooted in publicly available data sources. 3) to provide a basis for making comparisons between the states that are fair and objective. 4) to create a tool for analyzing other socio-economic issues at the state level: e.g. poverty rate differentials, job quality and quantity trade-offs, and patterns of economic growth.labor, work environment, business climate, decent work, poverty, job growth, economic growth, business start-ups

Decent Work in America: The 2005 Work Environment Index

What are the factors that make for a decent work environment and how do the conditions of work vary in different parts of the United States? To address these and similarly important questions in a clear and accessible way, we have developed a new approach for measuring the work environment on a state-bystate basis throughout the United States (including the District of Columbia) – the Work Environment Index (WEI). This is the first installment of the WEI, and we intend to update it every year. The WEI is a unique social indicator that brings together in one measure a range of factors that, in combination, define the quality of our working lives in the U.S. today. The WEI examines three basic dimensions of the U.S. work environment: job opportunities, job quality and workplace fairness. We rank the 50 states and the District of Columbia according to these three categories. Based on our measures of job opportunities, job quality, and workplace fairness, we find that, overall, Delaware offers the best relative work environment in the United States. Other states with high WEI rankings include New Hampshire, Minnesota, Vermont and Iowa. The states with the lowest WEI rankings are Louisiana, Texas, Arkansas, Utah, South Carolina and Mississippi. Our state-by-state WEI ranking enables us to consider a crucial and widely-discussed issue: Do the states that provide a relatively decent work environment end up paying a penalty in terms of their overall economic climate? For example, do states that rank high according to the WEI score poorly in terms of their overall growth rate, the pace at which new businesses are being formed in the state, or their rate of new job creation? In fact, we find that overall economic conditions in states with a high WEI rank are at least as favorable, if not somewhat more favorable, than those with low WEI rankings. Along with this, we also find that poverty rates in states with high WEI rankings are consistently lower than states with low WEI rankings.labor, work environment, business climate, decent work, poverty, job growth, economic growth, business start-up

Green Prosperity: How Clean-Energy Policies Can Fight Poverty and Raise Living Standards in the United States

This study, co-commissioned by Natural Resources Defense Council and Green For All, considers the employment and other policy effects of a $150 billion annual investment in clean-energy specifically in terms of its ability to raise living standards for lower-income workers and families. This report shows that investments in clean energy can benefit lower-income families first by expanding job opportunities, and also by lowering household utility bills through energy efficiency investments and transportation costs by making public transportation more accessible. >> Read more about the study and download state and regional fact sheets here

Measuring the Impact of Living Wage Laws: A Critical Appraisal of David Neumark's How Living Wage Laws Affect Low-Wage Workers and Low-Income Families

Drawing on data from the Current Population Survey (CPS), David Neumark (2002) finds that living wage laws have brought substantial wage increases for a high proportion of workers in cities that have passed these laws. He also finds that living wage laws significantly reduce employment opportunities for low-wage workers. We argue, first, that by truncating his sample to concentrate his analysis on low-wage workers, Neumark’s analysis is vulnerable to sample selection bias, and that his results are not robust to alternative specifications that utilize quantile regression to avoid such selection bias. In addition, we argue that Neumark has erroneously utilized the CPS data set to derive these results. We show that, with respect to both wage and employment effects, Neumark’s results are not robust to more accurate alternative classifications as to which workers are covered by living wage laws. We also show that the wage effects that Neumark observes for all U.S. cities with living wage laws can be more accurately explained as resulting from effects on sub-minimum wage workers in Los Angeles alone of a falling unemployment rate and rising minimum wage in that city.

Comments on Aaron Yelowitz, Santa Fe\u27s Living Wage Ordinance and the Labor Market

In a new study by Yelowitz “Santa Fe’s Wage Ordinance and the Labor Market,” dated September 23, 2005 (published by the Employment Policies Institute) Yelowitz claims to have demonstrated that the Santa Fe living wage ordinance is responsible for significant, negative consequences for Santa Fe’s least educated residents, including a 9.0 percentage point increase in the city’s unemployment rate among such workers. However, he derives these findings through a presentation of evidence that is misleading and incomplete, misusing the available data. We replicate and extend Yelowitz’s model to look at job growth specifically, and, using the same data as Yelowitz, we find that the Santa Fe ordinance did not produce any decline at all in the availability of jobs. Moreover, our estimates suggest that the living wage ordinance did increase earned income for the average worker affected by the ordinance, even if we accept Yelowitz’s estimates on reduced hours of work. In short, even while relying on Yelowitz’s own model and estimates, we find that, to date, the Santa Fe ordinance has succeeded in achieving its main aims: to improve the quality of jobs for low-wage workers in Santa Fe without reducing their employment opportunities