Read on Twitter
Given the renewed attention on the possibility of a $15 federal minimum wage, it's worth noting that "$15/hour" looks very different in 2021 than it did when the "Fight for $15" movement began in 2012. (Thread)
Obviously, there's been some inflation. $15 in 2012 is the equivalent of around $17 today. But that's only a small part of it. At least before the pandemic, wages were rising faster than inflation, *especially for low earners.*
In 2012, a quarter of jobs were in places where the median wage was under $15/hour (meaning more than half of all workers in those places would have been owed raises). In 2019, less than 5% of jobs were in such places.
(Note: Data here is from BLS's Occupational Employment Statistics. I'm dropping cases where estimates aren't available, which may bias my calculations somewhat.)
https://www.bls.gov/oes/tables.htm
https://www.bls.gov/oes/tables.htm
If we look at specific occupations in each MSA (e.g. fast food workers in Dallas), jobs with a median wage < $15 accounted for 44% of all jobs in 2012, vs 32% in 2019.
Of course, if the median wage is $15, that still means half of workers earn less. To get a fuller picture of the impact, we can look at occupations where at least 25% of workers earn < $15.
In 2012, those occupations (by MSA again) accounted for 58% of jobs, vs 48% in 2019.
In 2012, those occupations (by MSA again) accounted for 58% of jobs, vs 48% in 2019.
We can also look at this more directly, using data from the Current Population Survey (via our friends @ipums): In 2012, about 60% of workers earned less than $15/hr. In 2019, it was closer to 40%.
(Note: Last chart uses hourly wages from CPS, plus weekly earnings converted to hourly where hourly isn't available. I'm not doing any imputations or any other adjustments that are good practice when working with CPS data, because it's Friday afternoon and this is for Twitter.)
It's important to note WHY wages rose for low-wage workers in those years. A big part of the answer is that we had the strongest job market in a generation. Low unemployment rates forced companies to offer raises to attract/retain workers.
This is something @JanetYellen has talked a lot about in recent years: A "high-pressure economy" can bring disproportionate benefits to low-wage workers and others who are often left out of gains during a typical expansion. https://www.federalreserve.gov/newsevents/speech/yellen20161014a.htm
There's another factor: State & local minimum-wage increases. In 2019, @ernietedeschi calculated that the effective min. wage (the wage for the average min-wage worker) was nearly $12/hr.
He estimated state/local MWs accounted for 1/5 - 1/4 of wage growth for low-wage workers.
He estimated state/local MWs accounted for 1/5 - 1/4 of wage growth for low-wage workers.
Ernie's pieces on this are here: https://www.nytimes.com/2019/04/24/upshot/why-america-may-already-have-its-highest-minimum-wage.html
and here: https://www.nytimes.com/2020/01/03/upshot/minimum-wage-boost-bottom-earners.html
and here: https://www.nytimes.com/2020/01/03/upshot/minimum-wage-boost-bottom-earners.html
All those state/local increases have also given economists a lot more data on the effects of historically high minimum wages. (Note that it is no longer true that it's only high cost-of-living cities that have passed $15 laws.)
I'm not going to review that research in detail in this thread, but I think it's safe to say that the weight of the evidence is that these policies have not had the large negative effects on employment that some people feared.
As @arindube has noted, the economics profession itself has significantly softened its skepticism of minimum wages (and of a $15 minimum wage in particular) over the decades: https://twitter.com/arindube/status/1315857681148596224
There are still plenty of unanswered questions. What effect would a $15 MW have in very low-wage areas? What effect would it have during an economic downturn? What are the longer-run effects on business formation/survival, worker retention, productivity...
But compared to 2012, a $15 minimum wage in 2021 a) would affect far fewer workers/businesses, and b) is a much less novel concept. (The politics have obviously shifted too, but that's less my bailiwick.)
Fin.
Fin.
