The extra output that the last worker hired adds
For an average store in California, these changes translated into four extra workers per week and five fewer hours per worker per week - which meant that the total wage compensation of an average minimum wage worker in a California store actually fell by 13.6%. For every $1 increase in the minimum wage, we found that the total number of workers scheduled to work each week increased by 27.7%, while the average number of hours each worker worked per week decrease by 20.8%. However, our data suggests that the way in which those hours were allocated among workers did change. In other words, stores hired workers to work for the same overall number of hours regardless of whether minimum wage increased. We then controlled for statewide economic and employment differences between California and Texas in order to isolate just the impact of increasing the minimum wage.īased on this analysis, we found that increasing the minimum wage had no statistically significant impact on the total number of labor hours employed at a given store. Specifically, we looked at worker schedule and wage data from 2015 to 2018 for more than 5,000 employees at 45 stores in California - where the minimum wage was $9 in 2015, and has increased every year since then - and at 17 stores in Texas, where the minimum wage was $7.25 for the duration of our study.
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to compare scheduling differences in states with different minimum wage histories.
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To address these challenges, we conducted a study in which we leveraged a highly granular dataset of worker scheduling data from a national fashion retailer in the U.S. Minimum wage increases are also often accompanied by a host of other external factors and policies, making it difficult to identify test environments that enable a true apples-to-apples comparison of before and after minimum wage increases.
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This can have significant implications for employee welfare, but scheduling data is often harder to obtain than employment numbers. In addition to changing employment rates, studies suggest that firms may strategically respond to minimum wage increases by changing their approaches in other areas, such as worker schedules. Part of what makes it so tricky to quantify the impact of minimum wage policies is that they can influence firms’ behavior in a variety of complex, interrelated ways. Some studies suggest that raising minimum wage has a small negative effect on employment rates, while others find no such adverse effect on employment. However, economists remain uncertain as to the long-term impact of these policies on the welfare of American workers. Many states and municipalities have already passed minimum wage hikes in the last several years, and a variety of proposals are under consideration at the federal level. In the U.S., we’re seeing an increasing number of calls to increase the national minimum wage to $15/hour. Based on these findings, the authors argue that policymakers should consider minimum wage hikes with caution, and should be sure to complement them with policies designed to ensure consistent schedules and adequate hours for workers - or risk harming the very people they’re aiming to support. These factors corresponded to an average 11.6% decrease in total compensation for every $1 increase in the minimum wage. They found that in the stores that experienced a minimum wage hike, workers on average worked fewer hours per week, were less likely to qualify for benefits, and had less-consistent schedules. Researchers analyzed a detailed dataset of wage and scheduling data for more than 5,000 employees at a single national retailer, and compared outcomes for workers in California (which had several minimum wage increases during the study period) and Texas (which had zero increases).
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While proponents of increasing the minimum wage have grown increasingly vocal in the U.S., new research suggests that raising the minimum wage can actually have a significant negative impact on the total compensation of hourly workers.