Mandated Wage Floors and the Wage Structure: New Estimates of the Ripple Effects of Minimum Wage Laws
AbstractMinimum 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.
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Bibliographic InfoPaper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp116.
Date of creation: 2006
Date of revision:
ripple effect; wage spillover; wage norms; minimum wage; living wage; wage distribution; retail trade; low wage;
Find related papers by JEL classification:
- I3 - Health, Education, and Welfare - - Welfare and Poverty
- 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
- J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
- J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-25 (All new papers)
- NEP-LAB-2006-11-25 (Labour Economics)
- NEP-URE-2006-11-25 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Neumark & William L. Wascher, 2008. "Minimum Wages," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262141027, June.
- Robert Pollin, 2003. "Testimony on Proposed Santa Fe, New Mexico Living Wage Ordinance," Research Reports rr6, Political Economy Research Institute, University of Massachusetts at Amherst.
- Jeannette Wicks-Lim & Mark D. Brenner & Robert Pollin, 2004. "Economic Analysis of the Florida Minimum Wage Proposal," Published Studies ps17, Political Economy Research Institute, University of Massachusetts at Amherst.
- David Neumark & DMark Schweitzer & DaWilliam Wascher, 2004. "Minimum Wage Effects throughout the Wage Distribution," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
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