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

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

Abstract

This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to as much as $11 in 2015 and to as much as $13 in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly wage rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent. Consequently, total payroll for such jobs decreased, implying that the Ordinance lowered the amount paid to workers in low-wage jobs by an average of $74 per month per job in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.

Suggested Citation

  • Ekaterina Jardim & Mark C. Long & Robert Plotnick & Emma van Inwegen & Jacob Vigdor & Hilary Wething, 2017. "Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle," NBER Working Papers 23532, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:23532
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. repec:aea:aecrev:v:109:y:2019:i:8:p:2693-2727 is not listed on IDEAS
    3. Sebastian Link, 2019. "The Price and Employment Response of Firms to the Introduction of Minimum Wages," CESifo Working Paper Series 7575, CESifo Group Munich.
    4. Brantly Callaway & Pedro H. C. Sant'Anna, 2018. "Difference-in-Differences with Multiple Time Periods and an Application on the Minimum Wage and Employment," Papers 1803.09015, arXiv.org, revised Aug 2018.
    5. Clemens, Jeffrey, 2019. "Making Sense of the Minimum Wage: A Roadmap for Navigating Recent Research," MPRA Paper 94324, University Library of Munich, Germany.
    6. Xue Bai & Arpita Chatterjee & Kala Krishna & Hong Ma, 2018. "Trade and Minimum Wages in General Equilibrium: Theory and Evidence," NBER Working Papers 24456, National Bureau of Economic Research, Inc.
    7. Meer, Jonathan, 2018. "Recent Research on the Minimum Wage: Implications for Missouri," MPRA Paper 93926, University Library of Munich, Germany.
    8. Kevin Rinz & John Voorheis, 2018. "The Distributional Effects of Minimum Wages: Evidence from Linked Survey and Administrative Data," CARRA Working Papers 2018-02, Center for Economic Studies, U.S. Census Bureau.
    9. David Neumark, 2018. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," CESifo Working Paper Series 7386, CESifo Group Munich.
    10. Katharine G. Abraham & Melissa S. Kearney, 2018. "Explaining the Decline in the U.S. Employment-to-Population Ratio: a Review of the Evidence," NBER Working Papers 24333, National Bureau of Economic Research, Inc.
    11. James Bishop, 2018. "The Effect of Minimum Wage Increases on Wages, Hours Worked and Job Loss," RBA Research Discussion Papers rdp2018-06, Reserve Bank of Australia.
    12. Kreiner, Claus T. & Reck, Daniel & Skov, Peer Ebbesen, 2017. "Do Lower Minimum Wages for Young Workers Raise their Employment? Evidence from a Danish Discontinuity," CEPR Discussion Papers 12539, C.E.P.R. Discussion Papers.
    13. repec:bla:coecpo:v:36:y:2018:i:4:p:711-722 is not listed on IDEAS
    14. Doruk Cengiz & Arindrajit Dube & Attila Lindner & Ben Zipperer, 2018. "The Effect of Minimum Wages on Low-Wage Jobs: Evidence from the United States Using a Bunching Estimator," CEP Discussion Papers dp1531, Centre for Economic Performance, LSE.
    15. David Neumark, 2018. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," NBER Working Papers 25043, National Bureau of Economic Research, Inc.
    16. Neumark, David, 2018. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," IZA Discussion Papers 11999, Institute of Labor Economics (IZA).
    17. Kandilov, Amy & Kandilov, Ivan T., 2018. "The Impact of the Minimum Wage on Employment, Earnings, Wages, and Hours in the U.S. Agricultural Sector," 2018 Annual Meeting, August 5-7, Washington, D.C. 274158, Agricultural and Applied Economics Association.
    18. Francisco Perez-Arce & Maria J. Prados & Tarra Kohli, 2018. "The Decline in the U.S. Labor Force Participation Rate," Working Papers wp385, University of Michigan, Michigan Retirement Research Center.
    19. David Neumark, 2017. "The Employment Effects of Minimum Wages: Some Questions We Need to Answer," NBER Working Papers 23584, National Bureau of Economic Research, Inc.
    20. Benjamin Hansen & Keaton S. Miller & Caroline Weber, 2018. "Early Evidence on Recreational Marijuana Legalization and Traffic Fatalities," NBER Working Papers 24417, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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