Spillover Effects from Voluntary Employer Minimum Wages
117 Pages Posted: 1 Mar 2021 Last revised: 7 Jun 2022
Date Written: February 28, 2021
IMPORTANT UPDATE: Low unionization rates, a falling real federal minimum wage, and outsourcing have hampered wage growth in the low-wage sector in the US. In recent years, a number of private employers have opted to institute or raise company-wide mini- mum wages for their employees, sometimes in response to public pressure. To what extent do wage-setting changes at major employers spill over to other employers, and what are the broader labor market effects of these policies? In this paper, we study recent minimum wages by Amazon, Walmart, Target, CVS, and Costco using data from millions of online job ads; employee surveys; and the CPS.
Although the following version of this paper presents evidence that these policies induced wage increases at low-wage jobs at other employers, where the modal response was to match the wage announced by the large retailer, we have discovered a fundamental issue with the methodology used to measure basic spillover impacts. This methodology as well as associated robustness checks used in the paper, which emulated approaches in the larger literature in measuring minimum wage and related impacts, leads to estimated effects that arise from the statistical
mean reversion. When we apply a series of placebo and related tests and simulations using revised spillover treatment effect estimators, detailed in Appendix A, we do not find evidence of the spillover effects described in the following paper. A revised paper with a full discussion of the problems of the original approach and new results regarding revised estimates of spillover effects is forthcoming.
Keywords: Minimum wage, spillover effects, monopsony, oligopsony, labor markets
JEL Classification: J08, J31, J38, J42
Suggested Citation: Suggested Citation