The Effects of Increasing the Minimum Wage on Prices: Analyzing the Incidence of Policy Design and Context

MacDonald, Daniel; Nilsson, Eric A.

doi:10.17848/wp16-260

Cited by 8 publications

(5 citation statements)

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“…However, this is changing. Very recent work on the relationship between minimum wages and prices includes Ganapati and Weaver (2017), Leung (2018), Nilsson (2016), andRenkin, Montialoux, andSiegenthaler (2017).…”

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confidence: 99%

The Local Aggregate Effects of Minimum Wage Increases

Cooper¹,

Luengo‐Prado²,

Parker³

2019

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Using variation in minimum wages across cities and controlling for differences in business‐cycle factors and long‐run local economic trends, we find that following minimum wage increases, both, prices and nominal spending rise modestly. These gains are larger for certain subcategories of goods such as food away from home and in locations where low‐wage workers account for a larger share of employment. Further, minimum wage increases are associated with reduced total debt among households with low credit scores, higher auto debt, and increased access to credit.

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confidence: 99%

The Local Aggregate Effects of Minimum Wage Increases

Cooper¹,

Luengo‐Prado²,

Parker³

2019

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“…There are also a number of studies examining the impact of changes to the minimum wage on prices—often referred to as the “pass-through effect.” A recent paper from the Seattle Minimum Wage Study finds that food prices at local supermarkets were not affected by the local minimum wage increase after 2 years of policy implementation (that is, two increases to the local wage) (Buszkiewicz et al, 2019). MacDonald and Nilsson (2016) also find that the pass-through effect is much smaller than previously thought and prices usually only rise temporarily. This finding runs counter to earlier studies from Aaronson and French (2007), and Aaronson et al (2008) finding that minimum wage hikes increase prices.…”

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confidence: 43%

At What Point Do Wages Make Ends Meet? Investigating the Relationship Between Wages and Material Hardship in New York City

Collyer

2020

Families in Society: The Journal of Contemporary Social Service

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Several states and local areas have increased the minimum wage in recent years, and we anticipate that many policymakers and advocates will be interested in evaluating the impacts that these increases have had on material hardships such as not having enough money for rent, food, and utilities. The relationship between wages and material hardship absent policy changes has not been thoroughly documented in the literature, however. An understanding of how material hardships relate to wages is critical when trying to determine whether minimum wage policy changes have impacted material hardship. This article asks, is there a linear relationship between wages and material hardship at the bottom of the wage distribution, or do wages have to hit a certain point before we observe significant declines in material hardship? Results come from the New York City Longitudinal Study of Wellbeing (NYC-LSW), also referred to as the “Poverty Tracker,” and are specific to New York City in 2016. The results show that among workers in New York City in 2016, rates of material hardship are relatively constant at the bottom of the wage distribution, if not increasing. However, rates of hardship begin to decline more rapidly in the wage distribution around US$15 per hour.

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“…Studies of the effect of raising the minimum wage in U.S. cities and states show that, contrary to the reservations of some economists, economic growth actually increases with an increase in the minimum wage [61][62][63][64]. A study conducted by the Economic Policy Institute showed that a gradual rise of the minimum wage in the U.S. to $15 per hour by 2024 would improve the salaries of more than 40 million American workers by almost $3000 per year, a significant amount for those who fall within the low-income bracket [65].…”

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confidence: 87%

Addressing Inequality: The First Step Beyond COVID-19 and Towards Sustainability

et al. 2020

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The COVID-19 pandemic has impacted billions of lives across the world and has revealed and worsened the social and economic inequalities that have emerged over the past several decades. As governments consider public health and economic strategies to respond to the crisis, it is critical they also address the weaknesses of their economic and social systems that inhibited their ability to respond comprehensively to the pandemic. These same weaknesses have also undermined efforts to advance equality and sustainability. This paper explores over 30 interventions across the following nine categories of change that hold the potential to address inequality, provide all citizens with access to essential goods and services, and advance progress towards sustainability: (1) Income and wealth transfers to facilitate an equitable increase in purchasing power/disposable income; (2) broadening worker and citizen ownership of the means of production and supply of services, allowing corporate profit-taking to be more equitably distributed; (3) changes in the supply of essential goods and services for more citizens; (4) changes in the demand for more sustainable goods and services desired by people; (5) stabilizing and securing employment and the workforce; (6) reducing the disproportionate power of corporations and the very wealthy on the market and political system through the expansion and enforcement of antitrust law such that the dominance of a few firms in critical sectors no longer prevails; (7) government provision of essential goods and services such as education, healthcare, housing, food, and mobility; (8) a reallocation of government spending between military operations and domestic social needs; and (9) suspending or restructuring debt from emerging and developing countries. Any interventions that focus on growing the economy must also be accompanied by those that offset the resulting compromises to health, safety, and the environment from increasing unsustainable consumption. This paper compares and identifies the interventions that should be considered as an important foundational first step in moving beyond the COVID-19 pandemic and towards sustainability. In this regard, it provides a comprehensive set of strategies that could advance progress towards a component of Sustainable Development Goal (SDG) 10 to reduce inequality within countries. However, the candidate interventions are also contrasted with all 17 SDGs to reveal potential problem areas/tradeoffs that may need careful attention.

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The Effects of Increasing the Minimum Wage on Prices: Analyzing the Incidence of Policy Design and Context

Cited by 8 publications

References 1 publication

The Local Aggregate Effects of Minimum Wage Increases

The Local Aggregate Effects of Minimum Wage Increases

At What Point Do Wages Make Ends Meet? Investigating the Relationship Between Wages and Material Hardship in New York City

Addressing Inequality: The First Step Beyond COVID-19 and Towards Sustainability

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