Thread by @AnnaGody1

New working paper out today: "Minimum Wage Effects in Low-Wage Areas" with Michael Reich @IRLEUCB.

irle.berkeley.edu/minimum-wage-e…

In AL & MI, a $15 federal minimum wage by 2024 -> ratio of minimum to median wage of 0.8

What are employment effects of minimum wages at these high levels?
We don’t know – current state ratios much lower - unchartered territory!

But within states, many low wage counties already have very high relative minimum wages.

Ex: parts of agricultural CA, TX: the minimum wage approaches 80% of the median wage.

This paper: what happened to wages, jobs in those counties following MW changes?

-51 state and federal minimum wage changes covering most of the United States
-738 counties and PUMAs
-Data from the American Community Survey (ACS)

Sort counties by minimum to median wage ratio. Then estimate diff-in-diff models on each quartile – employment and wage effects in high impact localities across states.

(Also use the “bite” – share below new MW – very similar conclusions.)

Key results – in high impact localities:
-Wages up
-Employment unchanged
-Poverty down

Wage effects concentrated in top quartile of impacts (bite/Kaitz ratio). No corresponding job loss.

In high impact counties, higher MW leads to significant reductions in household poverty.

Additional findings:
-Results hold looking at KR>0.6, bite>20%.
-No reductions in hours, weeks worked.
-Significant reductions in child poverty.

For more context, see this great piece in @NYmag
nymag.com/intelligencer/…

Existing research - no employment effects of MW up to 59% of median wages.

https://twitter.com/arindube/status/1084828195021557760

In our paper we project a $15 federal MW bill will lead to higher ratios:
- 0.68 nationwide
- 0.8 in the lowest wages states