IDEAS home Printed from https://ideas.repec.org/p/uma/periwp/wp80.html
   My bibliography  Save this paper

The Economic Impact of Living Wage Ordinances

Author

Listed:
  • Mark D. Brenner

Abstract

Drawing upon both prospective and retrospective evidence, this paper reviews the economic effects of local living wage ordinances. I concentrate my attention on the higher costs these measures create for covered firms, as well as their budgetary implications vis-à-vis cities that adopt them. I also briefly review the effect that living wage laws have had on bidding environment for city service contracts. Based on a range of cost estimates associated with living wage laws, I then examine the adjustment channels firms are likely to pursue when adjusting to higher labor costs, including: raising prices; increasing firm productivity; redistributing income within the firm; laying off employees; and relocating out of the area covered by the living wage mandate.

Suggested Citation

  • Mark D. Brenner, 2004. "The Economic Impact of Living Wage Ordinances," Working Papers wp80, Political Economy Research Institute, University of Massachusetts at Amherst.
    • Handle: RePEc:uma:periwp:wp80
    as

    Download full text from publisher

    File URL: https://per.umass.edu/fileadmin/pdf/working_papers/working_papers_51-100/WP80.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Florencio Lopez-de-Silanes & Andrei Shleifer & Robert Vishny, 1997. "Privatization in the United States," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 447-471, Autumn.
    2. Card, David & Krueger, Alan B, 1994. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania," American Economic Review, American Economic Association, vol. 84(4), pages 772-793, September.
    3. David Card & Lawrence Katz & Alan Krueger, 1993. "Comment on David Neumark and William Wascher, 'Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws'," Working Papers 695, Princeton University, Department of Economics, Industrial Relations Section..
    4. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 1-48, March.
    5. Lawrence F. Katz & Alan B. Krueger, 1992. "The Effect of the Minimum Wage on the Fast-Food Industry," ILR Review, Cornell University, ILR School, vol. 46(1), pages 6-21, October.
    6. Raff, Daniel M G & Summers, Lawrence H, 1987. "Did Henry Ford Pay Efficiency Wages?," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 57-86, October.
    7. Levine, David I, 1992. "Can Wage Increases Pay for Themselves? Tests with a Production Function," Economic Journal, Royal Economic Society, vol. 102(414), pages 1102-1115, September.
    8. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
    9. Linneman, Peter, 1982. "The Economic Impacts of Minimum Wage Laws: A New Look at an Old Question," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 443-469, June.
    10. Peter Cappelli & Keith Chauvin, 1991. "An Interplant Test of the Efficiency Wage Hypothesis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(3), pages 769-787.
    11. Daniel Aaronson, 2001. "Price Pass-Through And The Minimum Wage," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 158-169, February.
    12. David Neumark & William L. Wascher, 1993. "Employment effects of minimum and subminimum wages: reply to Card, Katz, and Krueger," Working Paper Series / Economic Activity Section 144, Board of Governors of the Federal Reserve System (U.S.).
    13. Neumark, David & Wascher, William L., 2007. "Minimum Wages and Employment," Foundations and Trends(R) in Microeconomics, now publishers, vol. 3(1–2), pages 1-182, March.
    14. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    15. Campbell, Carl M, III, 1993. "Do Firms Pay Efficiency Wages? Evidence with Data at the Firm Level," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 442-470, July.
    16. David Neumark & William Wascher, 1992. "Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws," ILR Review, Cornell University, ILR School, vol. 46(1), pages 55-81, October.
    17. Robert Pollin & Jeannette Wicks-Lim & Mark D. Brenner, 2002. "Measuring the Impact of Living Wage Laws: A Critical Appraisal of David Neumark's How Living Wage Laws Affect Low-Wage Workers and Low-Income Families," Working Papers wp43, Political Economy Research Institute, University of Massachusetts at Amherst.
    18. David Neumark & Scott Adams, 2003. "Do Living Wage Ordinances Reduce Urban Poverty?," Journal of Human Resources, University of Wisconsin Press, vol. 38(3).
    19. William E. Spriggs, 1993. "Changes in the Federal Minimum Wage: A Test of Wage Norms," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 16(2), pages 221-239, December.
    20. David Card & Lawrence Katz & Alan B. Krueger, 1993. "Comment on David Neumark and William Wascher, "Employment Effects of Minimum and Subminimum Wages: Panel Data on State Minimum Wage Laws"," Working Papers 695, Princeton University, Department of Economics, Industrial Relations Section..
    21. Robert Pollin & Mark Brenner, 2000. "Economic Analysis of Santa Monica Living Wage Proposal," Research Reports rr2, Political Economy Research Institute, University of Massachusetts at Amherst.
    22. Alan Manning & Ted To, 2002. "Oligopsony and Monopsonistic Competition in Labor Markets," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 155-174, Spring.
    23. Zavodny, Madeline, 2000. "The effect of the minimum wage on employment and hours," Labour Economics, Elsevier, vol. 7(6), pages 729-750, November.
    24. Burkhauser, Richard V & Couch, Kenneth A & Wittenburg, David C, 2000. "A Reassessment of the New Economics of the Minimum Wage Literature with Monthly Data from the Current Population Survey," Journal of Labor Economics, University of Chicago Press, vol. 18(4), pages 653-680, October.
    25. repec:fth:prinin:298 is not listed on IDEAS
    26. Robert Pollin & Mark Brenner & Stephanie Luce, 2002. "Intended versus Unintended Consequences: Evaluating the New Orleans Living Wage Ordinance," Journal of Economic Issues, Taylor & Francis Journals, vol. 36(4), pages 843-875, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mary Donegan & Nichola Lowe, 2008. "Inequality in the Creative City: Is There Still a Place for “Old-Fashioned†Institutions?," Economic Development Quarterly, , vol. 22(1), pages 46-62, February.
    2. James Buss & Arthur Romeo, 2006. "The changing employment situation in some cities with living wage ordinances," Review of Social Economy, Taylor & Francis Journals, vol. 64(3), pages 349-367.
    3. Zenia Kotval & Zeenat Kotval-K & Patricia Machemer & John Mullin, 2012. "A living wage standard: A case study of the US Virgin Islands," Local Economy, London South Bank University, vol. 27(5-6), pages 541-557, August.
    4. Levin-Waldman, Oren M., 2008. "Characteristics of cities that pass living wage ordinances: Are certain conditions more conducive than others?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(6), pages 2201-2213, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jeannette Wicks-Lim & Mark D. Brenner & Robert Pollin, 2004. "Economic Analysis of the Florida Minimum Wage Proposal," Published Studies ps17, Political Economy Research Institute, University of Massachusetts at Amherst.
    2. David Neumark & William Wascher, 2006. "Minimum Wages and Employment: A Review of Evidence from the New Minimum Wage Research," NBER Working Papers 12663, National Bureau of Economic Research, Inc.
    3. Lemos Sara, 2005. "Political Variables as Instruments for the Minimum Wage," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 4(1), pages 1-31, December.
    4. Sara Lemos, 2004. "A Menu of Minimum Wage Variables for Evaluating Wages and Employment Effects: Evidence from Brazil," Discussion Papers in Economics 04/3, Division of Economics, School of Business, University of Leicester.
    5. 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.
    6. Madeline Zavodny, 1998. "Why minimum wage hikes may not reduce employment," Economic Review, Federal Reserve Bank of Atlanta, vol. 83(Q 2), pages 18-28.
    7. Richard Dickens & Stephen Machin & Alan Manning, 1994. "The Effects of Minimum Wages on Employment: Theory and Evidence from the US," NBER Working Papers 4742, National Bureau of Economic Research, Inc.
    8. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad, 2008. "The Effect of Minimum Wages on Wages and Employment: County-Level Estimates for the United States," IZA Discussion Papers 3300, Institute of Labor Economics (IZA).
    9. Pia M. Orrenius & Madeline Zavodny, 2008. "The Effect of Minimum Wages on Immigrants' Employment and Earnings," ILR Review, Cornell University, ILR School, vol. 61(4), pages 544-563, July.
    10. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2009. "Do minimum wages raise employment? Evidence from the U.S. retail-trade sector," Labour Economics, Elsevier, vol. 16(4), pages 397-408, August.
    11. Dale Belman & Paul Wolfson & Kritkorn Nawakitphaitoon, 2015. "Who Is Affected by the Minimum Wage?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 54(4), pages 582-621, October.
    12. Cuong Viet Nguyen, 2013. "The impact of minimum wages on employment of low-wage workers," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 21(3), pages 583-615, July.
    13. Young Cheol Jung & Adian McFarlane & Anupam Das, 2021. "The effect of minimum wages on consumption in Canada," The Economic and Labour Relations Review, , vol. 32(1), pages 65-89, March.
    14. Filiz Gülal & Adam Ayaita, 2020. "The Impact of Minimum Wages on Well-Being: Evidence from a Quasi-experiment in Germany," Journal of Happiness Studies, Springer, vol. 21(7), pages 2669-2692, October.
    15. Addison, John T. & Blackburn, McKinley L. & Cotti, Chad D., 2013. "Minimum wage increases in a recessionary environment," Labour Economics, Elsevier, vol. 23(C), pages 30-39.
    16. Marianne E. Page & Joanne Spetz & Jane Millar, 2005. "Does the minimum wage affect welfare caseloads?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 24(2), pages 273-295.
    17. Christian Ragacs, 2003. "Mindestlöhne und Beschäftigung: Ein Überblick über die neuere empirische Literatur," Working Papers geewp25, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    18. Laura Giuliano, 2007. "Minimum wage effects on employment, substitution, and the quality of the teenage labor supply: Evidence from personal data," Working Papers 0723, University of Miami, Department of Economics.
    19. L. J. Taylor & T. Kim, "undated". "The employment effect in retail trade of California's 1988 minimum wage increase," Institute for Research on Poverty Discussion Papers 1018-93, University of Wisconsin Institute for Research on Poverty.
    20. Nguyen Viet, Cuong, 2010. "The Impact of a Minimum Wage Increase on Employment, Wages and Expenditures of Low-Wage Workers in Vietnam," MPRA Paper 36751, University Library of Munich, Germany, revised 15 Aug 2011.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uma:periwp:wp80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Judy Fogg (email available below). General contact details of provider: https://edirc.repec.org/data/permaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.