State Minimum Wage Research Articles

The impact of taxes and regulations on firm births and deaths in state border counties

Purpose– The purpose of this paper is to examine the influence of the institutional environment on firm birth and death rates. It is hypothesized that high taxation levels, large government size, high levels of unionization and high minimum wages will be associated with relatively low firm birth and death rates.Design/methodology/approach– This study makes use of a set of custom tabulations from the US Census Bureau that contain data on county-level firm births and deaths. To account for differences in state policies, matched contiguous counties located on state borders are used to calculate matched birth and death ratios.Findings– In the sample of eastern US state border counties, state taxation levels and minimum wages had no significant relationship with firm birth rates, but there was a negative relationship between state union densities and firm birth rates. Both state education and public welfare expenditures were marginally negatively related to firm birth rates. State public welfare expenditures were negatively related to firm death rates, while a marginally significant negative relationship between hospital/health expenditures and firm death rates was observed.Research limitations/implications– These results indicate that state government expenditures may have varying influences on firm birth and death rates, and that high union densities may deter new firm entry.Originality/value– This paper makes use of a county matching technique to help control for confounding variables, allowing for differences in state policies to be better accounted for.

The Effects of Increasing the Minimum Wage on Prices: Analyzing the Incidence of Policy Design and Context

We analyze the price pass-through effect of the minimum wage and use the results to provide insight into the competitive structure of low-wage labor markets. Using monthly price series, we find that the pass-through effect is entirely concentrated on the month that the minimum wage change goes into effect, and is much smaller than what the canonical literature has found. We then discuss why our results differ from that literature, noting the impact of series interpolation in generating most of the previous results. We then use the variation in the size of the minimum wage change to evaluate the competitive nature of low-wage labor markets. Finally, we exploit the rich variation in minimum wage policy of the last 10–15 years — including the rise of state and city-level minimum wage changes and the increased use of indexation — to investigate how the extent of price pass-through varies by policy context. This paper contributes to the literature by clarifying our understanding of the dynamics and magnitude of the pass-through effect and enriching the discussion of how different policies may shape the effect that minimum wage hikes have on prices.

Are the Effects of Minimum Wage Increases Always Small? A Reanalysis of Sabia, Burkhauser, and Hansen

In a 2012 article, Sabia, Burkhauser, and Hansen reported very large negative effects of the 2004 to 2006 increase in the New York State minimum wage on the employment of young, less-educated workers. Hoffman reexamines their estimates using data from the full Current Population Survey (CPS), rather than the smaller CPS-MORG files they used, and finds no evidence of a negative employment impact. The full CPS, which is the source of U.S. official labor market statistics, is certainly the more appropriate and reliable data source. Furthermore, when Hoffman repeats the analysis using three states and the District of Columbia, which also had a substantial increase in the state minimum wage in the same time period, he finds evidence of a small positive employment effect. Together, the two findings are consistent with other, more recent research that reports very weak or zero employment effects of the minimum wage.

When Good Measurement Goes Wrong

Hoffman’s (2015) replication of Sabia, Burkhauser, and Hansen (SBH 2012) suggests that “unlucky” measurement error in low-skilled employment in the Current Population Survey Outgoing Rotation Groups (CPS-ORG) led SBH to produce upwardly biased estimates of the labor demand effects of the 2005 to 2006 New York State minimum wage increase. This study replicates Hoffman’s preferred policy estimates from the full CPS and finds evidence that the parallel trends assumption underlying his difference-in-difference approach is violated. When a synthetic control state with pretreatment employment trends similar to those in New York is constructed, this study estimates a relatively large negative employment elasticity with respect to the minimum wage for low-skilled individuals (–0.5), similar to the estimate SBH obtained using the CPS-ORG (–0.6).

U.S. State Minimum Wage Policies and Employment Performance Improvement

Federal, state and local departments of labor are managing the minimum wage levels. U.S. state minimum wage increases are positively associated with GRDP growth rates and education expenditure rates. Minimum wage increases are positively associated with economic capacities and human capital improvements. And U.S. state minimum wage increases are negatively associated with state citizen ideology scores. Thus, relatively conservative citizens are supporting the minimum wage increase and U.S. state governments/governors are reflecting these conservative citizen ideologies regardless of state governments' and state governors' ideologies. These are the strong evidences of state policy congruence in case of minimum wage policy. And politicians and public administrators should respect the evidence-based policy approaches. Specialist opinions, evaluation reports and experiences are excellent sources of evidence-based policy. Public policy decisions should be based on these evidence-based policy approaches. Especially, politicians and public administrators should manage the relationships between minimum wage policy and employment performances cautiously by using public performance measures and statistical research methods. And minimum wage policy should be harmonized with labor productivity improvement.

Working-Class Power and Spirituality

Working-Class Power and Spirituality

More Equal than We Thought? Using Vote Validation to Better Understand Participation Inequality in the States

AbstractInequality in political participation is a well-known and often studied feature of American politics. An important study examining misreporting of voter turnout in opinion surveys, however, calls into question the true extent of participation inequality. Ansolabehere and Hersh's first-ever 50-state vote validation project shows that those with more political resources are more likely to misreport turnout. That is, those with higher incomes are more likely than others to report that they had voted when in fact they did not. These findings suggest that income disparities in participation are not as large as opinion surveys have led us to believe. Moreover, studies using differences between voters and nonvoters as a key political indicator may also be biased. This article presents the first assessment of whether vote misreporting creates systematic bias in measures of state participation inequality. An index of economic inequality in participation for the 50 states is developed using the Ansolabehere and Hersh validated vote data and compares the measure of political inequality with a similar measure using traditional (i.e., nonvalidated) survey data. These state indices are used to determine the extent of bias produced by misreporting and whether this bias has implications for studies using these measures of participation inequality. The latter is assessed by examining the influence of the self-reported and validated inequality measures on state welfare programs and minimum wage policy.

Employment effects of US minimum wage policy

A strong argument against raising the minimum wage, often voiced in US policy debates, is that a higher minimum wage will have adverse effects on job opportunities. Considerable effort has been devoted to providing quantitative estimates of the employment effects of the minimum wage with quite mixed results. We review this literature before turning to estimates of the impact of state level differences in the level of the minimum wage on youth employment in local labor markets in the Great Lakes Region of the US. We find that a higher minimum wage level is associated with higher earnings, lower employment, and reduced worker turnover for those in the 14 to 18 age group. For workers aged 19 to 21 and 22 to 24, we find less consistent evidence of important minimum wage effects on earnings and employment.

Pooling Multiple Case Studies Using Synthetic Controls: An Application to Minimum Wage Policies

We propose a simple, distribution-free method for pooling synthetic control case studies using the mean percentile rank. We also test for heterogeneous treatment effects using the distribution of estimated ranks, which has a known form. We propose a cross-validation based procedure for model selection. Using 29 cases of state minimum wage increases between 1979 and 2013, we find a sizable, positive and statistically significant effect on the average teen wage. We do detect heterogeneity in the wage elasticities, consistent with differential bites in the policy. In contrast, the employment estimates suggest a small constant effect not distinguishable from zero.

Contra o paternalismo laboral: burguesia industrial no Rio Grande do Sul e relações de trabalho no Brasil

This article analyzes political positions of the industrial bourgeoisie in the State of Rio Grande do Sul related to two current issues in discussions about labor relations in Brazil during the second government of Luiz Inacio Lula da Silva (2007 - 2010): a Proposed Constitutional Amendment which predicted the reduction of workload in the country for 40 hours a week and the State minimum wage establishment. If, on the one hand, the analysis registers the capacity of the industrial bourgeoisie to act as an organized social collective force, on the other hand it indicates that the principles of privatization, deregulation and flexibility legitimized their political positions upon labor relations during that period.

Taxation Without Representation? The Political Economy of State Minimum Wage Levels

Minimum wage hikes express our sympathy for the working poor and our solidarity with them. But their importance is largely symbolic. The net effects of moderate increases in wage floors are vanishingly small. Statutory wage minimums work like taxes on labor, with their proceeds paid directly to low-wage workers and their costs shifted forward to consumers. Consequently, their distributional effects on the burden side are like those of sales taxes. Variations in state minimums appear to be driven in good measure by a combination of partisan political control and opportunities for burden shifting to nonresidents.

Social cost of leptospirosis cases attributed to the 2011 disaster striking Nova Friburgo, Brazil.

The aim of this study was to estimate the social cost of the leptospirosis cases that were attributed to the natural disaster of January 2011 in Nova Friburgo (State of Rio de Janeiro, Brazil) through a partial economic assessment. This study utilized secondary data supplied by the Municipal Health Foundation of Nova Friburgo. Income scenarios based on the national and state minimum wages and on average income of the local population were employed. The total social cost of leptospirosis cases attributed to the 2011 disaster may range between US$21,500 and US$66,000 for the lower income scenario and between US$23,900 and US$100,800 for that of higher income. Empirical therapy represented a total avoided cost of US$14,800, in addition to a reduction in lethality. An estimated 31 deaths were avoided among confirmed cases of the disease, and no deaths resulted from the leptospirosis cases attributed to the natural disaster. There has been a significant post-disaster rise in leptospirosis incidence in the municipality, which illustrates the potential for increased cases—and hence costs—of this illness following natural disasters, which justifies the adoption of preventive measures in environmental health.

The Minimum Wage and Crime

Abstract Does crime respond to changes in the minimum wage? A growing body of empirical evidence indicates that increases in the minimum wage have a displacement effect on low-skilled workers. Economic reasoning provides the possibility that disemployment may cause youth to substitute from legal work to crime. However, there is also the countervailing effect of a higher wage raising the opportunity cost of crime for those who remain employed. We use the National Longitudinal Survey of Youth 1997 cohort to measure the effect of increases in the minimum wage on self-reported criminal activity and examine employment–crime substitution. Exploiting changes in state and federal minimum wage laws from 1997 to 2010, we find that workers who are affected by a change in the minimum wage are more likely to commit crime, become idle, and lose employment. Individuals experiencing a binding minimum wage change were more likely to commit crime and work only part time. Analyzing heterogeneity shows those with past criminal connections are especially likely to see decreased employment and increased crime following a policy change, suggesting that reduced employment effects dominate any wage effects. The findings have implications for policy regarding both the low-wage labor market and efforts to deter criminal activity.

Employment Effects of the 2009 Minimum Wage Increase: New Evidence from State-Based Comparisons of Workers by Skill Level

Abstract In July, 2009, when the US Federal minimum wage was increased from $6.55 to $7.25, individuals in nearly one-third of all states were unaffected, since the state minimum wage already exceeded $7.25. We use this variation to make comparisons of the employment of low-skill workers with their peers across states and with workers within states who were arguably unaffected by the increase, using DID and DIDID methods. Our data come from the 2009 Current Population Survey, 4 and 5 months before and after the increase. We find little evidence of negative employment effects for teens or less-educated adults. Further control for demographic characteristics and state fixed effects have relatively small effects on the size and significance of estimated effects.

Employment Based Health Insurance and the Minimum Wage

Previous studies have found no significant evidence that increased minimum wages reduce fringe benefit receipt (Beeson Royalty 2000; Simon and Kaestner 2003). This paper provides new estimates of the effects of increased federal and state minimum wages on the coverage of low-wage workers by employer-provided health insurance using data from the 1988-2005 Current Population Surveys. In contrast to previous studies, I use a difference-in-difference approach. I define several treatment groups, including individuals with hourly earnings equal to or less than the minimum wage, as well as those in the lowest 1 and 2 deciles of the hourly wage distribution. Little evidence was found for the federal minimum wage increase of 1990-91, but estimates of the effect of the 1996-97 increase suggest a small negative impact for younger workers and workers in smaller firms. At the state level, there was no evidence of reduced employer health insurance coverage for Oregon (1991), but modest evidence of a negative effect for New Jersey (1992), Connecticut (2000-01) and Massachusetts (2000-01) of between 2 and 8 percentage points.

Living Wage Politics in the U.S. States: Understanding Race, Labor, and Party Politics

Since the passage of welfare reform in 1996, the federal government has been increasingly inactive in sustaining income support for working adults and their families. Twenty-nine states have responded to federal inactivity by increasing their state minimum wage standards or enacting and expanding earned income tax credits. This paper investigates the roles that state-level public opinion, Democratic party strength, union membership and labor lobbying, and ethnic diversity have played in creating support for state living wage policies. Having a Democratic governor, Democratic legislative strength, and state initiative and referenda provisions all positively contribute to state living wage standards.

The Rate of Proprietorship Among Metropolitan Areas: The Impact of the Local Economic Environment and Capital Resources

Legal rules and the economic environment play an important role in the decision to become an entrepreneur. Many studies examine the effect of such institutions at the national or state level. The metropolitan area may be a more appropriate geography to examine, since entrepreneurs often serve a more localized market and there is wide variation in both the environment for and incidence of proprietorship among metropolitan areas. We find that proprietorship increases with home equity, intangible wealth, unemployment, relative earnings of proprietors, and population. It decreases with higher state income tax rates and minimum wages.

Do Minimum Wage Laws Affect People Who are Not Covered? Evidence from Documented, Undocumented, Hourly, and Piece Rate Workers in U.S. Agriculture

While a stated goal of minimum wage increases is to benefit low income workers, some employers are not obligated to provide at least minimum wages to all employees. U.S. farm employers comprise one of these groups. Employees of large farms and H2-A workers, (temporary non-immigrant workers lawfully admitted to perform temporary or seasonal agricultural services), are protected by minimum wage legislation, while other migrant workers, (especially those who are paid piece rate), are exempt. Furthermore, U.S. agriculture is characterized by a large percentage of illegal migrants, and workers who are illegal may or may not receive wages above minimum levels. This paper presents a case study, drawing from agriculture, that examines if and how minimum wage laws affect uncovered workers. Analysis examines wages and hours worked as functions of federal and state minimum wages, using data from a nationally and regionally representative survey of employed farm workers. Results suggest wage increases for both covered and uncovered workers, greatest gains to those who are formally covered, and gains not being at the expense of hours worked.

Minimum wages, poverty, and material hardship: new evidence from the SIPP

While a number of policymakers have argued that raising the minimum wage will reduce material hardship, empirical evidence to support or refute this claim is scant. Using data drawn from the Survey of Income and Program Participation, we examine the effect of minimum wage increases on poverty, material hardship, and government program participation. Difference-in-difference estimates provide little evidence that state and federal minimum wage increases between 1996 and 2007 reduced poverty, material hardship, or receipt of public program benefits among all individuals, workers, younger individuals without high school degrees, or younger black individuals. Our findings are robust across several measures of hardship, including poverty, financial hardship, housing stress, food insecurity, durable goods deprivation, and health insecurity. We find some evidence of modest redistribution effects of the minimum wage among low-skilled individuals.

“Omak's Minimum Pay Law Joan D'Arc”: Telling the Local Story ofWest Coast Hotelv.Parrish(1937)

Scholars agree about the socio-political significance of West Coast Hotel v. Parrish (1937), in which the U.S. Supreme Court upheld the Washington State minimum wage law for women. However, they tend to focus on the decision’s relationship to FDR’s Court-packing plan. Little attention has been paid to the stories of the parties; beyond identifying her as the famous-for-five-minutes “Wenatchee chambermaid,” scholars have provided us with minimal information about the plaintiff Elsie Parrish, and even less is known about the lawyers and lower court judges who participated in this landmark case. Using analysis of local newspaper coverage, the original court documents, and drawing upon information provided by descendants of Elsie Parrish, her lawyer C.B. Conner, and Fred Crollard, the attorney for the West Coast Hotel Company, in this article I bring to light many previously untold details of the local story of Parrish. This material highlights the importance of telling the stories of Supreme Court cases, because it demonstrates that for the residents of Washington State it was the local story, rather than the national narrative, of Parrish that captured their attention.