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Why do labor unions advocate for minimum wage increases?

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  • Clemens, Jeffrey
  • Strain, Michael R.

Abstract

Over the past decade, organized labor has played a significant role in advocating for minimum wage increases. Why might this be, given that the minimum wage may act as a substitute for the bargaining power offered by labor unions? In this paper, we study the interplay between minimum wages and union membership. Using variation in U.S. states’ minimum wages during the 2010s, we estimate that each dollar in minimum wage increase predicts a 5 percent increase (0.3 pp) in the likelihood of union membership among individuals ages 16–40. Consistent with a classic “free-riding” hypothesis, however, we find that minimum wage increases predict declines in union membership among the minimum wage's most direct beneficiaries. Instead, increases in union membership occur among much broader groups that are not directly affected by the minimum wage.

Suggested Citation

  • Clemens, Jeffrey & Strain, Michael R., 2025. "Why do labor unions advocate for minimum wage increases?," Labour Economics, Elsevier, vol. 94(C).
    • Handle: RePEc:eee:labeco:v:94:y:2025:i:c:s0927537125000405
    DOI: 10.1016/j.labeco.2025.102713
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    1. Clemens, Jeffrey & Strain, Michael R., 2021. "The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence over the Short and Medium Run Using a Pre-analysis Plan," IZA Discussion Papers 14747, Institute of Labor Economics (IZA).
    2. Henry S Farber & Daniel Herbst & Ilyana Kuziemko & Suresh Naidu, 2021. "Unions and Inequality over the Twentieth Century: New Evidence from Survey Data," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 136(3), pages 1325-1385.
    3. Paul Frymer & Jacob M. Grumbach, 2021. "Labor Unions and White Racial Politics," American Journal of Political Science, John Wiley & Sons, vol. 65(1), pages 225-240, January.
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    6. Goodman-Bacon, Andrew, 2021. "Difference-in-differences with variation in treatment timing," Journal of Econometrics, Elsevier, vol. 225(2), pages 254-277.
    7. Jeffrey Clemens & Michael R. Strain, 2017. "Estimating the Employment Effects of Recent Minimum Wage Changes: Early Evidence, an Interpretative Framework, and a Pre-Commitment to Future Analysis," NBER Working Papers 23084, National Bureau of Economic Research, Inc.
    8. Richard Murphy, 2020. "Why Unions Survive: Understanding How Unions Overcome the Free-Rider Problem," Journal of Labor Economics, University of Chicago Press, vol. 38(4), pages 1141-1188.
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    11. Jeffrey Clemens & Michael R. Strain, 2018. "The Short‐Run Employment Effects Of Recent Minimum Wage Changes: Evidence From The American Community Survey," Contemporary Economic Policy, Western Economic Association International, vol. 36(4), pages 711-722, October.
    12. Peter Brummund & Michael R. Strain, 2020. "Does Employment Respond Differently to Minimum Wage Increases in the Presence of Inflation Indexing?," Journal of Human Resources, University of Wisconsin Press, vol. 55(3), pages 999-1024.
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    15. Baker, Andrew C. & Larcker, David F. & Wang, Charles C.Y., 2022. "How much should we trust staggered difference-in-differences estimates?," Journal of Financial Economics, Elsevier, vol. 144(2), pages 370-395.
    16. Jeffrey Clemens & Lisa B. Kahn & Jonathan Meer, 2021. "Dropouts Need Not Apply? The Minimum Wage and Skill Upgrading," Journal of Labor Economics, University of Chicago Press, vol. 39(S1), pages 107-149.
    17. Michael R. Strain & Jeffrey Clemens & Duncan Hobbs, 2018. "A database on the passage and enactment of recent state minimum wage increases," AEI Economics Working Papers 991185, American Enterprise Institute.
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    19. Clemens, Jeffrey & Strain, Michael R., 2023. "Does Policy Advocacy Generate Good PR? Evidence from Labor Unions and Minimum Wages," IZA Discussion Papers 16014, Institute of Labor Economics (IZA).
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    Cited by:

    1. Dosi Giovanni & Virgillito Maria Enrica, 2024. "Minimum Wage for Italy: From Social Justice to Productive Efficiency," Intereconomics: Review of European Economic Policy, Sciendo, vol. 59(4), pages 231-235.

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    More about this item

    Keywords

    Political economy; Social choice; Minimum wage; Unionization;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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