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Minimum-Wage Increases and Low-Wage Employment: Evidence from Seattle

Author

Listed:
  • Ekaterina Jardim
  • Mark C. Long
  • Robert Plotnick
  • Emma van Inwegen
  • Jacob Vigdor
  • Hilary Wething

Abstract

Seattle raised its minimum wage to as much as $11 in 2015 and as much as $13 in 2016. We use Washington State administrative data to conduct two complementary analyses of its impact. Relative to outlying regions of the state identified by the synthetic control method, aggregate employment at wages less than twice the original minimum—measured by total hours worked—declined. A portion of this reduction reflects jobs transitioning to wages above the threshold; the aggregate analysis likely overstates employment effects. Longitudinal analysis of individual Seattle workers matched to counterparts in outlying regions reveals no change in the probability of continued employment but significant reductions in hours, particularly for less experienced workers. Job turnover declined, as did hiring of new workers into low-wage jobs. Analyses suggest aggregate employment elasticities in the range of −0.2 to −2.0, concentrated on the intensive margin in the short run and largest among inexperienced workers.

Suggested Citation

  • Ekaterina Jardim & Mark C. Long & Robert Plotnick & Emma van Inwegen & Jacob Vigdor & Hilary Wething, 2022. "Minimum-Wage Increases and Low-Wage Employment: Evidence from Seattle," American Economic Journal: Economic Policy, American Economic Association, vol. 14(2), pages 263-314, May.
    • Handle: RePEc:aea:aejpol:v:14:y:2022:i:2:p:263-314
    DOI: 10.1257/pol.20180578
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    Citations

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    Cited by:

    1. Ruonan Xu, 2023. "Difference-in-Differences with Interference," Papers 2306.12003, arXiv.org, revised Feb 2024.
    2. Meiselbach, Mark K. & Abraham, Jean M., 2023. "Do minimum wage laws affect employer-sponsored insurance provision?," Journal of Health Economics, Elsevier, vol. 92(C).
    3. Erik Hurst & Patrick J. Kehoe & Elena Pastorino & Thomas Winberry, 2022. "The Distributional Impact of the Minimum Wage in the Short and Long Run," NBER Working Papers 30294, National Bureau of Economic Research, Inc.
    4. Gavoille, Nicolas & Zasova, Anna, 2023. "What we pay in the shadows: Labor tax evasion, minimum wage hike and employment," Journal of Public Economics, Elsevier, vol. 228(C).
    5. Sebastian Link, 2019. "The Price and Employment Response of Firms to the Introduction of Minimum Wages," CESifo Working Paper Series 7575, CESifo.
    6. Alexandre Janiak & Jonathan Rojas Hepburn, 2023. "The Grasshopper, the Ant, and the Minimum Wage," Documentos de Trabajo 570, Instituto de Economia. Pontificia Universidad Católica de Chile..
    7. Loukas Karabarbounis & Jeremy Lise & Anusha Nath, 2022. "Minimum Wages and Labor Markets in the Twin Cities," NBER Working Papers 30239, National Bureau of Economic Research, Inc.
    8. Taylor, Garrett C. & West, James E., 2023. "Minimum wage effects within Census Based Statistical Areas: A matched pair cross-border analysis," Economics Letters, Elsevier, vol. 229(C).
    9. Lennon, Conor & Teltser, Keith F. & Fernandez, Jose & Gohmann, Stephan, 2023. "How morality and efficiency shape public support for minimum wages," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 618-637.
    10. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    11. Sebastian Fossati & Joseph Marchand, 2024. "First to $15: Alberta’s Minimum Wage Policy on Employment by Wages, Ages, and Places," ILR Review, Cornell University, ILR School, vol. 77(1), pages 119-142, January.
    12. David Neumark, 2023. "The Effects of Minimum Wages on (Almost) Everything? A Review of Recent Evidence on Health and Related Behaviors," NBER Working Papers 31191, National Bureau of Economic Research, Inc.
    13. Fanfani, Bernardo, 2023. "The employment effects of collective wage bargaining," Journal of Public Economics, Elsevier, vol. 227(C).
    14. Kim, Ji Hwan & Lee, Jungmin & Lee, Kyungho, 2023. "Minimum wage, social insurance mandate, and working hours," Journal of Public Economics, Elsevier, vol. 225(C).
    15. Dharmasankar, Sharada & Yoo, Hoyoung, 2023. "Assessing the main and spillover effects of Seattle's minimum wage on establishment decisions," Regional Science and Urban Economics, Elsevier, vol. 99(C).

    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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