Evidence of The Unintended Labor Scheduling Implications of The Minimum Wage

33 Pages Posted: 16 Jun 2021

See all articles by Qiuping Yu

Qiuping Yu

Scheller College of Business, Georgia Institute of Technology

Shawn Mankad

Cornell University

Masha Shunko

Foster School of Business, University of Washington

Date Written: June 10, 2021

Abstract

Problem definition: The effect of the minimum wage is an important yet controversial topic that has received attention for decades. Our study is the first to take an operational lens and empirically study the impact of the minimum wage on firms' scheduling practices.

Methodology/results: Using a highly granular dataset from a chain of fashion retail stores, we estimate that a $1 increase in the minimum wage, while having a negligible impact on the total labor hours used by the stores, leads to a 27.7% increase in the number of workers scheduled per week, but a 20.8% reduction in weekly hours per worker. For an average store in California, these changes translate into four extra workers and five fewer hours per worker per week. Such scheduling adjustment not only reduces the total wage compensation per worker but also reduces workers' eligibility for benefits. We also show that the minimum wage increase reduces the consistency of weekly and daily schedules for workers. For example, the absolute (relative) deviation in weekly hours worked by each worker increases by up to 33.0% (6.7%) and by up to 9.5% (2.0%) in daily hours, as the minimum wage increases by $1.

Managerial implications: Our study empirically identifies and highlights a new operational mechanism through which increasing the minimum wage may negatively impact worker welfare. Our further analysis suggests that the combination of the reduced hours, lower eligibility for benefits, and less consistent schedules (that resulted from the minimum wage increase) may substantially hurt worker welfare, even when the overall employment at the stores stay unchanged. By better understanding the intrinsic trade-off of firms' scheduling decisions, policy makers can better design minimum wage policies that will truly benefit workers.

Keywords: Minimum Wage, Labor Scheduling, Inadequate and Inconsistent Work Schedules

Suggested Citation

Yu, Qiuping and Mankad, Shawn and Shunko, Masha, Evidence of The Unintended Labor Scheduling Implications of The Minimum Wage (June 10, 2021). Available at SSRN: https://ssrn.com/abstract=3863757 or http://dx.doi.org/10.2139/ssrn.3863757

Qiuping Yu (Contact Author)

Scheller College of Business, Georgia Institute of Technology ( email )

800 West Peachtree NW
Atlanta, GA 30308
United States

HOME PAGE: http://https://qiupingyu.com/

Shawn Mankad

Cornell University ( email )

Ithaca, NY 14853
United States
6072559594 (Phone)

Masha Shunko

Foster School of Business, University of Washington ( email )

PACCAR Hall
Seattle, WA 47185
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
318
Abstract Views
1,810
rank
118,969
PlumX Metrics