Large minimum wage increases especially difficulties young, less educated workers – Reason.com

A study released by the National Bureau of Economic Research found that younger, less educated workers have been affected by recent state-level minimum wage increases. The paper was written by Jeffrey Clemens, an economist at the University of California, San Diego, and Michael R. Strain of the American Enterprise Institute.

The supply-demand analysis at the heart of the economy suggests that if labor prices rise, demand will fall, other things will be equal. The last decade has provided particularly useful empirical data against which to test this concept.

“After the Great Depression [of the late 2000s], There was a break in both state and federal efforts to raise the minimum wage, “the authors note.” This break has created a baseline (or ‘pre-period’) for experimental purposes. This was followed by a significant deviation from the state’s minimum wage policy. Several states have enacted laws and begun implementing minimum wage changes that have changed their levels significantly. From January 2011 to January 2019, for example, Washington, DC, California and New York increased their minimum wages by 61, 50 and 53 percent, respectively. In the additional 224 states, wage levels rose more moderately and remained unchanged in the rest. “Researchers have therefore been able to compare the effects of” moderate minimum wage changes and historically large minimum wage changes “across the United States over the past decade.

They found that “compared to the short and medium term, a relatively large increase in the minimum wage has reduced the employment rate by only 2.5 percentage points among those with less experience and education.” Conversely, small wages, or inflation indicators that affect wages, have a “variable and zero-centric” effect.

The data “proves that the moderate-driven effects of large minimum wage changes are bigger and more negative than their short-term effects,” so we need to find out a lot of the time before those bad employment effects emerge.

The changes in the study analysis were historically much larger than the minimum historically for the minimum wage in the state, with changes for both small and large states. Among their data: By a data measure, “less employment than high school education among 16- to 25-year-olds … expanded by 4.0 percentage points in 2019 compared to states that enacted minimum wage changes.” By measure, it was 3.2 percentage points lower.

In a series of Tweet his research, Co-author Clemens notes that “the relative decline is … less for high school education, especially for samples from 16 to 25 year olds, but also present in all 16 to 21 year olds.”

While not claiming the cause, the researchers found that “housing recovery after the Great Recession was quite strong in states that had relatively large minimum wage increases. Medium house prices in these groups increased by about 49 percent from 2011-2013 base between 2001 through …. States that have not raised their minimum wages have seen their prices rise by about 1 percent, and states that have raised their minimum wages have increased their average house prices by about 1 percent on average. “Meanwhile,” Per capita income has risen by more than $ 7,600 in the wage-changing states. “

But those macro results in high wage-growth states did not go to low-skilled workers. Clemens believes, as Per one tweet, That “overall income growth, house prices, and high-skilled employment will give you a greater sense of employment gain for less skilled people than states that enacted minimum wage increases. Instead, they experienced relative declines.”

When it comes to designing minimum wage increases No. If a little education harms young workers, then adults must feel worse than younger ones.

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