Journal of Labor Research

, Volume 35, Issue 4, pp 323–345 | Cite as

The $10.10 Minimum Wage Proposal: An Evaluation across States

Article
  • 1.4k Downloads

Abstract

This paper offers state-level estimates of job loss from increasing the federal minimum wage to $10.10 per hour in 2016. Given the vast differences in nominal wages across geography, a federal increase in minimum wage that is not indexed to local wage levels will have a differential impacts across states. The proposed minimum wage would be binding for between 17 and 18 % of workers nationally. We estimate coverage rates ranging from just 4 % in Washington D.C. to as high as 51 % in Puerto Rico, with 13 states having at least 20 % of the employed population covered by the proposal. Using labor demand elasticities from previous empirical work, these coverage rates imply national employment losses between 550,000 and 1.5 million workers. The range of state estimates shows that states are differentially impacted, with high-end loss estimates ranging between 2.8 % of covered employees in Arkansas to over 41 % in Puerto Rico. Sensitivity analysis highlights that using even a simple methodology with relatively few assumptions for estimating employment loss from minimum wage changes is subject to a high degree of uncertainty.

Keywords

Minimum wage Fiscal federalism Employment 

JEL

J18 J38 

References

  1. Addison JT, Blackburn ML, Cotti CD (2009) Do minimum wages raise employment? Evidence from the US retail-trade sector. Labour Econ 16:397–408CrossRefGoogle Scholar
  2. Addison JT, Blackburn ML, Cotti CD (2013) Minimum wage increases in a recessionary environment. Labour Econ 23:30–39CrossRefGoogle Scholar
  3. Allegretto SA, Dube A, Reich M (2011) Do minimum wages really reduce teen employment? Accounting for heterogeneity and selectivity in state panel data. Ind Relat J Econ Soc 50:205–240CrossRefGoogle Scholar
  4. Brown C, Gilroy C, Kohen A (1982) The effect of the minimum wage on employment and unemployment. J Econ Lit 20:487–528Google Scholar
  5. Card D (1992a) Do minimum wages reduce employment? A case study of California, 1987–89. Ind Labor Relat Rev 46:38–54CrossRefGoogle Scholar
  6. Card D (1992b) Using regional variation in wages to measure the effects of the federal minimum wage. Ind Labor Relat Rev 46:22–37CrossRefGoogle Scholar
  7. Card D, Katz LF, Krueger AB (1994) Comment on David Neumark and William Wascher, ‘Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws. Ind Labor Relat Rev 47(3):487–96Google Scholar
  8. Congressional Budget Office (2014) The effects of a minimum-wage increase on employment and family income. Accessed at http://www.cbo.gov/sites/default/files/cbofiles/attachments/44995-MinimumWage.pdf
  9. Dube A, Lester TW, Reich M (2010) Minimum wage effects across state borders: estimates using contiguous counties. Rev Econ Stat 92:945–964CrossRefGoogle Scholar
  10. Giuliano L (2013) Minimum wage effects on employment, substitution, and the teenage labor supply: evidence from personnel data. J Labor Econ 31:155–194CrossRefGoogle Scholar
  11. Katz L, Krueger A (1992) The effect of the minimum wage on the fast-food industry. Ind Labor Relat Rev 46:6–21CrossRefGoogle Scholar
  12. Meer J, West J (2013) Effects of the minimum wage on employment dynamics. National Bureau of Economic ResearchGoogle Scholar
  13. Neumark D, Wascher W (1992) Employment effects of minimum and subminimum wages: panel data on state minimum wage laws. Ind Labor Relat Rev 46:55–81CrossRefGoogle Scholar
  14. Neumark D, Wascher W (1994) Employment effects of minimum and subminimum wages: reply to Card, Katz and Krueger. Ind Labor Relat Rev 47:497–512CrossRefGoogle Scholar
  15. Neumark D, Schweitzer M, Wascher W (2004) Minimum wage effects throughout the wage distribution. J Hum Resour 39:425–450CrossRefGoogle Scholar
  16. Neumark D, Salas J, Wascher W (2013) Revisiting the minimum wage-employment debate: throwing out the baby with the bathwater? National Bureau of Economic ResearchGoogle Scholar
  17. Sabia JJ (2009) Identifying minimum wage effects: new evidence from monthly CPS data. Ind Relat J Econ Soc 48:311–328CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Department of EconomicsMarquette UniversityMilwaukeeUSA
  2. 2.Department of EconomicsTexas Christian UniversityFort WorthUSA

Personalised recommendations