Thoughts

Spillover effects from voluntary employer minimum wages

Ellora Derenoncourt, Clemens Noelke, and David Weil
SSRN. 2.28.21


 

Low unionization rates, a falling real federal minimum wage, and prevalent non-competes characterize low-wage jobs in the United States and contribute to growing inequality. In recent years, a number of private employers have opted to institute or raise company-wide minimum 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 labor market effects of these policies? In this paper, we study recent minimum wages by Amazon, Walmart, Target, and Costco using data from millions of online job ads and employee surveys. We document that these policies induced wage increases at low-wage jobs at other employers. In the case of Amazon, which instituted a $15 minimum wage in October 2018, our estimates imply that a 10% increase in Amazon’s advertised hourly wages led to an average increase of 2.6% among other employers in the same commuting zone. Using the CPS, we estimate wage increases in exposed jobs in line with our magnitudes from employee surveys and find that major employer minimum wage policies led to small but precisely estimated declines in employment, with employment elasticities ranging from -.04 to -.13.

Download entire paper.

MORE ON THE SUBJECT: “When Amazon Raises Its Wages Local Companies Follow Suit,” by Ben Casselman and Jim Tankersley, 3.5.21, New York Times. Read article.

David Weil is Dean and Professor at Brandeis University’s Heller School of Social Policy and Management. He served as US Wage and Hour Administrator at the Department of Labor during the last three years of the Obama administration. He is a leading international expert on workplace and labor market policy and was the Peter and Deborah Wexler Professor of Management at Boston University’s Questrom School of Business before coming to Brandeis. The materials on this site arise from analysis contained in The Fissured Workplace and a growing body of research regarding the fundamental restructuring of employment and its impacts on workers and businesses. It also discusses approaches to dealing with the fissured workplace developed during the Obama administration as well as new ideas and efforts being discussed and undertaken today. 

News

“For First Time, Average Pay for Supermarket and Restaurant Workers
Tops $15 an Hour,” by Andrew Van Dam and Heather Long, Washington
Post, 8.8.21. Read.

“Higher Employer Minimum Wage Forcing Raises for all Workers,”
by Wayne Heilman, Colorado Springs Gazette, 6.17.21. Read.

“President Biden Announces Key Nominations,” White House statement
including information about David Weil’s nomination, 6.3.21. Read.

“Uber Critic David Weil Tapped for Second Stint as DOL Wage Chief,”
by Ben Penn, Bloomberg Law, 6.3.21. Read.

“Kim Kardashian is being sued for employment practices that are sadly
common,” by Terri Gerstein, NBC THINK, 5.26.21. Read.

“When Amazon Raises its Minimum Wage, Local Companies Follow Suit,”
by Ben Casselman and Jim Tankersley, New York Times, 5.5.21. Read.

“When Amazon Raises Wages, Nearby Firms Follow Suit,” The Economist,
 4.30.21. Read.

“Labor secretary says gig workers should be classified as employees in
‘a lot of cases,’” by Eli Rosenberg, The Seattle Times, 4.29.21. Read.

“Big Companies Raising Wages Could Boost Pay for Workers at Nearby
Businesses,” by Madison Hoff and Juliana Kaplan, Business Insider,
4.16.21. Read.

“Lawmakers Look to Spruce Up Gig Work Rather Than Replace It,”
by Josh Eidelson, Bloomberg Law, 3.18.21. Read article.

“When Amazon Raises Its Wages Local Companies Follow Suit,”
by Ben Casselman and Jim Tankersley, New York Times, 3.10.21.
Read article.

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