The New Wave of Local Minimum Wage Policies: Evidence From Six Cities

CWED Policy Report, 2018

65 Pages Posted: 11 Oct 2018

See all articles by Sylvia Allegretto

Sylvia Allegretto

University of California, Berkeley

Anna Godøy

University of California, Berkeley - Institute for Research on Labor and Employment

Carl Nadler

University of California, Berkeley

Michael Reich

University of California, Berkeley - Department of Economics

Date Written: September 6, 2018

Abstract

In recent years, a new wave of state and local activity has transformed minimum wage policy in the U.S. As of August 2018, ten large cities and seven states have enacted minimum wage policies in the $12 to $15 range.1 Dozens of smaller cities and counties have also enacted wage standards in this range.2 These higher minimum wages, which are being phased in gradually, will cover well over 20 percent of the U.S. workforce. With a substantial number of additional cities and states poised to soon enact similar policies, a large portion of the U.S. labor market will be held to a higher wage standard than has been typical over the past 50 years.

These minimum wage levels substantially exceed the previous peak in the federal minimum wage, which reached just under $10 (in today’s dollars) in the late 1960s. As a result, the new policies will increase pay directly for 15 to 30 percent of the workforce in these cities and as much as 40 to 50 percent of the workforce in some industries and regions. By contrast, the federal and state minimum wage increases between 1984 and 2014 increased pay directly for less than eight percent of the applicable workforce.

This report examines the effects of these new policies. Although minimum wage effects on employment have been much studied and debated, this new wave of higher minimum wages attains levels beyond the evidential reach of most previous studies. Moreover, city-level policies might have effects that differ from those of state and federal policies. Yet, most of the empirical studies of minimum wages focus on the state and federal-level policies. The literature on the effects of city-level minimum wages is much smaller. Our report helps fill these gaps.

Keywords: Minimum Wage

JEL Classification: J01, J08, J88

Suggested Citation

Allegretto, Sylvia and Godøy, Anna and Nadler, Carl and Reich, Michael, The New Wave of Local Minimum Wage Policies: Evidence From Six Cities (September 6, 2018). CWED Policy Report, 2018, Available at SSRN: https://ssrn.com/abstract=3251977

Sylvia Allegretto (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Anna Godøy

University of California, Berkeley - Institute for Research on Labor and Employment ( email )

2521 Channing Way #5555
Berkeley, CA 94720
United States

Carl Nadler

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Michael Reich

University of California, Berkeley - Department of Economics ( email )

549 Evans Hall #3880
Berkeley, CA 94720-3880
United States
510-643-7079 (Phone)
510-642-6432 (Fax)

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