State-level Minimum Wage Research Articles

Minimum Wages and Consumer Credit: Impacts on Access to Credit and Traditional and High-Cost Borrowing

Proponents of minimum wage legislation point to its potential to raise earnings and reduce poverty, while opponents argue that disemployment effects lead to net welfare losses. But these arguments typically ignore the possibility of spillover effects on other aspects of households' financial circumstances. This paper examines how state-level minimum wages affect the decisions of lenders and low-income borrowers. Using data derived from direct mailings of credit offers, survey-reported usage of high-cost alternative credit products, and debt recorded in credit reports, we find that higher minimum wages increase the supply of unsecured credit to lower-income adults, who in turn, use more traditional credit and less high-cost alternative credit like payday loans. Further, delinquency rates fall and credit scores rise in both the short run and one year later. Overall, our results suggest that minimum wage policy has positive spillover effects by relaxing borrowing constraints among lower-income households, thereby reducing borrowing costs. This reduction in borrowing costs can increase disposable income by 20-110 percent more than the direct effect on earnings alone.

Child labor and the minimum wage: Evidence from India

This study examines how changes in the minimum wage affect child labor in India. The analysis uses repeated cross sections of India's NSSO employment data from 1983 to 2008 merged with data on state-level minimum wage rates. Theoretically, the impact of the minimum wage on child work could go either way, so empirical evidence from a country with high rates of child labor and a myriad of minimum wage laws across states and industries helps to lessen the ambiguity. Results indicate that regardless of gender, in urban areas, a higher minimum wage reduces child labor in household work. In rural areas a similar result applies for girls while household labor does rise for boys. The minimum wage has virtually no impact on child work outside of the home across urban and rural areas.

Minimum Wages and Consumer Credit: Impacts on Access to Credit and Traditional and High-Cost Borrowing

Proponents of minimum wage legislation point to its potential to raise earnings and lift families out of poverty, while opponents argue that disemployment effects lead to net welfare losses. But these arguments typically ignore the possibility that minimum wage policy has spillover effects on other aspects of households' financial circumstances. This paper examines how state-level minimum wage changes affect the decisions of lenders and low-income borrowers. Using data derived from direct mailings of credit offers, debt recorded in credit reports, and survey-reported usage of alternative credit products, we broadly find that when minimum wages rise, access to credit expands for lower-income households, who in turn, use more traditional credit and less high-cost alternatives. Specifically, for each $1 increase in the minimum wage, lower-income households receive 7 percent more credit card offers, with higher limits and improved terms. Further, there is a drop in usage of high-cost borrowing: payday borrowing falls 40 percent. Finally, we find that borrowers are also better able to manage their debt: delinquency rates fall by 5 percent. Overall, our results suggest that minimum wage policy has positive spillover effects by relaxing borrowing constraints among lower income households.

The Effect of an Increased Minimum Wage on Infant Mortality and Birth Weight.

To investigate the effects of state minimum wage laws on low birth weight and infant mortality in the United States. We estimated the effects of state-level minimum wage laws using a difference-in-differences approach on rates of low birth weight (< 2500 g) and postneonatal mortality (28-364 days) by state and month from 1980 through 2011. All models included state and year fixed effects as well as state-specific covariates. Across all models, a dollar increase in the minimum wage above the federal level was associated with a 1% to 2% decrease in low birth weight births and a 4% decrease in postneonatal mortality. If all states in 2014 had increased their minimum wages by 1 dollar, there would likely have been 2790 fewer low birth weight births and 518 fewer postneonatal deaths for the year.

Agricultural Exceptionalism at the State Level: Characterization of Wage and Hour Laws for U.S. Farmworkers

Despite difficult working conditions, farmworkers in the United States are excluded from many federal-level labor protections. The exclusion of farmworkers from standards that apply to most other workers is referred to as agricultural exceptionalism. This exclusion was born out of the successful efforts of southern agricultural interests to exempt black sharecroppers from the New Deal package of social reforms. Farmworkers continue to belong to particularly vulnerable social and economic groups. U.S. states can establish their own labor protections that go beyond federal laws and regulations. Though agricultural exceptionalism is understood at the federal level, little is known about agricultural exceptionalism in state labor standards. This study is a comprehensive 50-state legal and regulatory mapping of minimum wage, overtime, and rest and meal period standards as they apply to farmworkers. To analyze the extent of agricultural exceptionalism in the states, we performed a search of iteratively defined search terms in WestLawNext. Two researchers independently read and coded identified state laws and regulations in their entireties. Results reveal that agricultural exceptionalism is far-reaching in state-level minimum wage and overtime protections. Exceptionalism is universal in overtime standards. Rest and meal period standards exist less frequently at the state level, and exceptions for agriculture in those standards are rare. The results from this analysis are useful in identifying states and policy areas with strong and weak protections for farmworkers.

Effects of wages on smoking decisions of current and past smokers

PurposeWe used longitudinal data and instrumental variables (IVs) in a prospective design to test for the causal effects of wages on smoking prevalence among current and past smokers. MethodsNationally representative U.S. data were drawn from the 1999–2009 waves of the Panel Study of Income Dynamics. Our overall sample was restricted to full time employed persons, aged 21–65 years. We excluded part time workers and youths because smoking and wage correlations would be complicated by labor supply decisions. We excluded adult never smokers because people rarely begin smoking after the age of 20 years. IVs were created with state-level minimum wages and unionization rates. We analyzed subsamples of men, women, the less educated, the more educated, quitters, and backsliders. Validity and strength of instruments within the IV analysis were conducted with the Sargan-Hansen J statistic and F tests. ResultsWe found some evidence that low wages lead to more smoking in the overall sample and substantial evidence for men, persons with high school educations or less (<13 years of schooling), and quitters. Results indicated that 10% increases in wages lead to 5.5 and 4.6 percentage point decreases in smoking for men and the less educated; they also increased the average chance of quitting among base-year smokers from 17.0% to 20.4%. Statistical tests suggested that IVs were strong and valid in most samples. Subjects' other family income, including spouses' wages, was entered as a control variable. ConclusionsIncreases in an individual's wages, independent of other income, decreased the prevalence of smoking among current and past smokers.

Who Benefits from a Minimum Wage Increase?

This paper addresses the question of how a minimum wage increase affects the wages of low-wage workers. Most studies assume that there is a simple mechanical increase in the wage for workers earning a wage between the old and the new minimum wage, with some studies allowing for spillovers to workers with wages just above this range. Rather than assume that the wages of these workers would have remained constant, this paper estimates how a minimum wage increase impacts a low-wage worker’s wage relative to the wage the worker would have if there had been no minimum wage increase. The method allows for the effect to depend not only on the initial wage of the worker, but also nonlinearly on the size of the minimum wage increase. Using Current Population Survey data from 2005 to 2008, a period with a large number of U.S. state-level minimum wage increases, this paper finds that low-wage workers who experience a small increase in the minimum wage tend to have lower wage growth than if there had been no minimum wage increase. A large increase to the minimum wage increases the wages of not only those workers who previously earned less than the new minimum wage, but also spill over to workers with moderately higher wages. Finally, this paper finds little evidence of heterogeneity in the effect by age, gender, income, and race.

Associations Between Minimum Wage Policy and Access to Health Care: Evidence From the Behavioral Risk Factor Surveillance System, 1996–2007

We examined whether minimum wage policy is associated with access to medical care among low-skilled workers in the United States. We used multilevel logistic regression to analyze a data set consisting of individual-level indicators of uninsurance and unmet medical need from the Behavioral Risk Factor Surveillance System and state-level ecological controls from the US Census, Bureau of Labor Statistics, and several other sources in all 50 states and the District of Columbia between 1996 and 2007. Higher state-level minimum wage rates were associated with significantly reduced odds of reporting unmet medical need after control for the ecological covariates, substate region fixed effects, and individual demographic and health characteristics (odds ratio = 0.853; 95% confidence interval = 0.750, 0.971). Minimum wage rates were not significantly associated with being uninsured. Higher minimum wages may be associated with a reduced likelihood of experiencing unmet medical need among low-skilled workers, and do not appear to be associated with uninsurance. These findings appear to refute the suggestion that minimum wage laws have detrimental effects on access to health care, as opponents of the policies have suggested.

The state–federal dichotomy in the effects of minimum wages on teenage employment in the United States

For the period 1984–1997, we find that state-level minimum wage hikes had no negative employment impact whereas federal hikes did. This dichotomy may account for the differences between the results of the ‘new economics of the minimum wage’ and time series studies.

Neither Mothers Nor Breadwinners: African-American Women's Exclusion From US Minimum Wage Policies, 1912-1938

We examine two key US labor market policies: state-level minimum wages for women from 1912-23 and the federal minimum wage established under the Fair Labor Standards Act of 1938. Each of these regulations implicitly defined which groups were and were not expected to conform to the hegemonic male breadwinner/female homemaker model of gender relations. In fact, social reformers and labor leaders advocated these policy measures as a means of extending the male-breadwinner family to recent European immigrants and white southerners. The male-breadwinner family and public policies designed to foster it became one means of defining a commonality of whiteness among different ethnic groups during a period of assimilation. Through the inclusion and exclusion of particular occupations and industries, African-American women were assigned a subordinated gender identity as neither full-time mothers nor legitimate breadwinners. They responded by forging their own gender identity as co-breadwinners.

Do Low-Income Families Benefit from Minimum Wage Increases? Evidence from State-Level Minimum Wage Laws

Several recent studies contend that falling real minimum wage rates are an important factor behind rising wage inequality and increasing poverty rates. Other studies find the more conventional result that they have very little influence on poverty and inequality, but these studies are generally based on simulated labor market responses. This study examines the influence of minimum wage rates on poverty rates and family income inequality using state-level minimum wages. The methodology has the key advantage of not requiring simulated labor market responses to minimum wage increases. The results suggest that increases in minimum wage rates and coverage do not reduce poverty rates or income inequality.