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Minimum Wage Effects in Low-Wage Areas. Working Paper #106-19

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  • Godoey, Anna
  • Reich, Michael

Abstract

A proposal to raise the federal minimum wage to $15 by 2024 would increase the relative minimum wage – the ratio to the national median wage– to about .68. In Alabama and Mississippi, our two lowest-wage states, the relative minimum wage would rise to .77 and .85, respectively. Yet research on state-level minimum wage policies does not extend beyond $10; the highest studied state-level relative minimum wage is .59. To close this gap we study minimum wage effects in counties and PUMAs where relative minimum wage ratios already reach as high as .82. Using ACS data since 2005 and 51 events, we sort counties and PUMAs according to their relative minimum wages and bites. We report average results for all the events in our sample, and separately for those with lower and higher impacts. We find positive wage effects but do not detect adverse effects on employment, weekly hours or annual weeks worked. We do not find negative employment effects among women, blacks and/or Hispanics. We do find substantial declines in household and child poverty.

Suggested Citation

  • Godoey, Anna & Reich, Michael, 2019. "Minimum Wage Effects in Low-Wage Areas. Working Paper #106-19," Institute for Research on Labor and Employment, Working Paper Series qt90k268p9, Institute of Industrial Relations, UC Berkeley.
    • Handle: RePEc:cdl:indrel:qt90k268p9
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    References listed on IDEAS

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    1. Jonathan Meer & Jeremy West, 2016. "Effects of the Minimum Wage on Employment Dynamics," Journal of Human Resources, University of Wisconsin Press, vol. 51(2), pages 500-522.
    2. Godoey, Anna & Reich, Michael & Allegretto, Sylvia, 2019. "Parental Labor Supply: Evidence from Minimum Wage Changes. Working Paper #103-19," Institute for Research on Labor and Employment, Working Paper Series qt1f66h44t, Institute of Industrial Relations, UC Berkeley.
    3. Anne Case & Angus Deaton, 2017. "Mortality and Morbidity in the 21st Century," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 48(1 (Spring), pages 397-476.
    4. Amy Finkelstein & Matthew Gentzkow & Heidi Williams, 2016. "Sources of Geographic Variation in Health Care: Evidence From PatientMigration," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(4), pages 1681-1726.
    5. Clemens, Jeffrey & Wither, Michael, 2019. "The minimum wage and the Great Recession: Evidence of effects on the employment and income trajectories of low-skilled workers," Journal of Public Economics, Elsevier, vol. 170(C), pages 53-67.
    6. David Card & Lawrence F. Katz & Alan B. Krueger, 1993. "An Evaluation of Recent Evidence on the Employment Effects of Minimum and Subminimum Wages," NBER Working Papers 4528, National Bureau of Economic Research, Inc.
    7. 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.
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    Cited by:

    1. Marchingiglio, Riccardo & Poyker, Michael, 2019. "The Employment Effects of Gender-Specific Minimum Wage," Working Papers 290, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    2. Wursten, Jesse & Reich, Michael, 2021. "Racial Inequality and Minimum Wages in Frictional Labor Markets," Institute for Research on Labor and Employment, Working Paper Series qt01n6g4dz, Institute of Industrial Relations, UC Berkeley.
    3. Neumark, David & Yen, Maysen, 2020. "Effects of Recent Minimum Wage Policies in California and Nationwide: Initial Results from a Pre-specified Analysis Plan," IZA Discussion Papers 13062, Institute of Labor Economics (IZA).

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