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Intended vs. Unintended Consequences: Evaluating the New Orleans Living Wage Proposal

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  • Robert Pollin
  • Mark D. Brenner
  • Stephanie Luce
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    Abstract

    In February 2002, New Orleans endorsed with a 63 percent majority a ballot initiative to establish a citywide minimum wage one dollar above the federal minimum. We surveyed New Orleans businesses in 1999 to estimate this proposal’s costs. We present the main results from this survey. We then evaluate five means through which firms might adjust to cost increases—raising prices, improving productivity, redistribution of firms’ income, layoffs/labor displacements, and relocations. Because we find that the cost increases will be small for most firms—i.e. one percent or less of these firms’ operating budgets—we conclude that changes in prices, productivity and distribution are the likely primary means through which firms will absorb these costs. We also consider the likely benefits of the measure to some New Orleans businesses through an expenditure multiplier.

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    Bibliographic Info

    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp9.

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    Date of creation: 2002
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    Handle: RePEc:uma:periwp:wp9

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    1. Robert Pollin & Mark Brenner, 2000. "Economic Analysis of Santa Monica Living Wage Proposal," Research Reports rr2, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. William Wascher & David Neumark, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Comment," American Economic Review, American Economic Association, vol. 90(5), pages 1362-1396, December.
    3. Robert Pollin & Stephanie Luce & Mark Brenner, 1999. "Economic Analysis of the New Orleans Minimum Wage Proposal," Research Reports rr1, Political Economy Research Institute, University of Massachusetts at Amherst.
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    Cited by:
    1. Reich, Michael & Hall, Peter & Jacobs, Ken, 2003. "Living Wage Policies at San Francisco Airport:: Impacts on Workers and Businesses," Institute for Research on Labor and Employment, Working Paper Series qt8km9s5m7, Institute of Industrial Relations, UC Berkeley.

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