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The Short‐Run Employment Effects Of Recent Minimum Wage Changes: Evidence From The American Community Survey

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  • Jeffrey Clemens
  • Michael R. Strain

Abstract

This paper presents early evidence on the employment effects of state minimum wage increases enacted between January 2013 and January 2015. As of 2015, we estimate that relatively large minimum wage increases (defined as those exceeding $1) reduced employment among low‐skilled population groups by just over 1 percentage point. Smaller minimum wage increases, as well as increases linked to inflation indexation provisions, appear to have had much smaller (and possibly positive) effects on employment over our sample period. The estimates thus raise the potential importance of nonlinearities in the minimum wage's effects, which are consistent with standard models of the labor market. (JEL H11, J08, J23)

Suggested Citation

  • 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.
    • Handle: RePEc:bla:coecpo:v:36:y:2018:i:4:p:711-722
    DOI: 10.1111/coep.12279
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    References listed on IDEAS

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    1. Sylvia Allegretto & Arindrajit Dube & Michael Reich & Ben Zipperer, 2017. "Credible Research Designs for Minimum Wage Studies," ILR Review, Cornell University, ILR School, vol. 70(3), pages 559-592, May.
    2. 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.
    3. Jeffrey Clemens & Michael R. Strain, 2017. "Estimating the Employment Effects of Recent Minimum Wage Changes: Early Evidence, an Interpretative Framework, and a Pre-Commitment to Future Analysis," NBER Working Papers 23084, National Bureau of Economic Research, Inc.
    4. Isaac Sorkin, 2015. "Are There Long-Run Effects of the Minimum Wage?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(2), pages 306-333, April.
    5. Joseph J. Sabia & Richard V. Burkhauser & Benjamin Hansen, 2012. "Are the Effects of Minimum Wage Increases Always Small? New Evidence from a Case Study of New York State," ILR Review, Cornell University, ILR School, vol. 65(2), pages 350-376, April.
    6. Michael R. Strain & Peter Brummund, 2016. "Real and permanent minimum wages," AEI Economics Working Papers 875967, American Enterprise Institute.
    7. Hoffman Saul D., 2014. "Employment Effects of the 2009 Minimum Wage Increase: New Evidence from State-Based Comparisons of Workers by Skill Level," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(3), pages 695-721, July.
    8. 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.
    9. 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.
    10. French, Eric Baird & Aaronson, Daniel & Sorkin, Isaac, 2016. "Industry Dynamics and the Minimum Wage: A Putty-Clay Approach," CEPR Discussion Papers 11097, C.E.P.R. Discussion Papers.
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    Citations

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    Cited by:

    1. Clemens, Jeffrey & Strain, Michael R., 2022. "Understanding “Wage Theft”: Evasion and avoidance responses to minimum wage increases," Labour Economics, Elsevier, vol. 79(C).
    2. Eva Moreno-Galbis, 2020. "Minimum wage and immigrants' participation in the welfare system: evidence from France," Working Papers halshs-02862874, HAL.
    3. Jeffrey Clemens & Michael R. Strain, 2020. "Public Policy and Participation in Political Interest Groups: An Analysis of Minimum Wages, Labor Unions, and Effective Advocacy," NBER Working Papers 27902, National Bureau of Economic Research, Inc.
    4. Clemens, Jeffrey & Strain, Michael R., 2019. "Minimum Wage Analysis Using a Pre-Committed Research Design: Evidence through 2017," IZA Discussion Papers 12388, Institute of Labor Economics (IZA).
    5. Ernest Boffy-Ramirez, 2022. "Push or Pull? Measuring the labor supply response to the minimum wage using an individual-level panel," Applied Economics, Taylor & Francis Journals, vol. 54(35), pages 4043-4059, July.
    6. Mario Bossler & Michael Oberfichtner & Claus Schnabel, 2020. "Employment Adjustments Following Rises and Reductions in Minimum Wages: New Insights From a Survey Experiment," LABOUR, CEIS, vol. 34(3), pages 323-346, September.
    7. Neumark David, 2019. "The Econometrics and Economics of the Employment Effects of Minimum Wages: Getting from Known Unknowns to Known Knowns," German Economic Review, De Gruyter, vol. 20(3), pages 293-329, August.
    8. Jeffrey Clemens & Michael R. Strain, 2021. "The Heterogeneous Effects of Large and Small Minimum Wage Changes: Evidence over the Short and Medium Run Using a Pre-Analysis Plan," NBER Working Papers 29264, National Bureau of Economic Research, Inc.
    9. 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.
    10. Ranjan, Priya & Neumark, David & Rodriguez-Lopez, Antonio, 2022. "What's across the Border? Re-Evaluating the Cross-Border Evidence on Minimum Wage Effects," IZA Discussion Papers 15282, Institute of Labor Economics (IZA).
    11. 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.
    12. Jeffrey Clemens & Michael R. Strain, 2023. "How important are minimum wage increases in increasing the wages of minimum wage workers?," Contemporary Economic Policy, Western Economic Association International, vol. 41(4), pages 594-612, October.
    13. Jeffrey Clemens & Michael R. Strain, 2023. "Does Wage Theft Vary by Demographic Group? Evidence from Minimum Wage Increases," NBER Working Papers 31818, National Bureau of Economic Research, Inc.
    14. Clemens, Jeffrey & Strain, Michael R., 2023. "Why Do Labor Unions Advocate for Minimum Wage Increases?," IZA Discussion Papers 16059, Institute of Labor Economics (IZA).
    15. Jonathan Meer & Hedieh Tajali, 2023. "Effects of the Minimum Wage on the Nonprofit Sector," NBER Working Papers 31281, National Bureau of Economic Research, Inc.
    16. Jeffrey Clemens & Lisa B. Kahn & Jonathan Meer, 2021. "Dropouts Need Not Apply? The Minimum Wage and Skill Upgrading," Journal of Labor Economics, University of Chicago Press, vol. 39(S1), pages 107-149.
    17. Clemens, Jeffrey & Hobbs, Duncan & Strain, Michael R., 2018. "A Database on the Passage and Enactment of Recent State Minimum Wage Increases," IZA Discussion Papers 11748, Institute of Labor Economics (IZA).
    18. Anna Godoey & Michael Reich, 2021. "Are Minimum Wage Effects Greater in Low‐Wage Areas?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(1), pages 36-83, January.
    19. Michael R. Strain, 2021. "An Argument Against The $15 Minimum Wage," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 40(4), pages 1289-1297, September.
    20. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.
    21. Clemens, Jeffrey, 2019. "Making Sense of the Minimum Wage: A Roadmap for Navigating Recent Research," MPRA Paper 94324, University Library of Munich, Germany.
    22. David Neumark & Maysen Yen, 2022. "Effects of recent minimum wage policies in California and nationwide: Results from a pre‐specified analysis plan," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(2), pages 228-255, April.
    23. Clemens, Jeffrey & Strain, Michael R., 2020. "Minimum Wage Analysis Using a Pre-Committed Research Design: Evidence through 2018," IZA Discussion Papers 13286, Institute of Labor Economics (IZA).
    24. 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).
    25. Boffy-Ramirez, Ernest, 2019. "The Short-Run Effects of the Minimum Wage on Employment and Labor Market Participation: Evidence from an Individual-Level Panel," IZA Discussion Papers 12137, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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