Intended vs. Unintended Consequences: Evaluating the New Orleans Living Wage Proposal

PERI Working Paper No. 9

44 Pages Posted: 27 Jan 2003

See all articles by Robert Pollin

Robert Pollin

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics

Mark D. Brenner

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics

Stephanie Luce

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics

Date Written: 2001

Abstract

In February 2002, New Orleans endorsed with a 63 percent majority a ballot initiative to establish a citywide minimum wage one dollar above the federal minimum. We surveyed New Orleans businesses in 1999 to estimate this proposal's costs. We present the main results from this survey. We then evaluate five means through which firms might adjust to cost increases - raising prices, improving productivity, redistribution of firms' income, layoffs/labor displacements, and relocations. Because we find that the cost increases will be small for most firms - i.e. one percent or less of these firms' operating budgets - we conclude that changes in prices, productivity and distribution are the likely primary means through which firms will absorb these costs. We also consider the likely benefits of the measure to some New Orleans businesses through an expenditure multiplier.

Suggested Citation

Pollin, Robert and Brenner, Mark D. and Luce, Stephanie, Intended vs. Unintended Consequences: Evaluating the New Orleans Living Wage Proposal (2001). PERI Working Paper No. 9, Available at SSRN: https://ssrn.com/abstract=333241 or http://dx.doi.org/10.2139/ssrn.333241

Robert Pollin (Contact Author)

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics ( email )

940 Thompson Hall
Amherst, MA 01003
United States
413-577-0126 (Phone)

Mark D. Brenner

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics ( email )

Amherst, MA 01003
United States

Stephanie Luce

University of Massachusetts at Amherst - College of Social and Behavioral Sciences - Department of Economics ( email )

10th Floor Thompson Hall
Amherst, MA 01003
United States

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