AgdaPkt 2017-09-25 Closed and Joint SA PFA

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The Effects of a $15 Minimum Wage by 2019 in Santa Clara County and San Jose 16 1. PREVIOUS MINIMUM WAGE RESEARCH In the past two decades, economists have conducted numerous econometric studies of the effects of minimum wages. The overwhelming majority have focused on the employment effects (Belman and Wolfson 2014; Belman and Wolfson 2015; Schmitt 2015). Typically these studies make use of panel data on workers or firms from standard government sources such as the Current Population Survey or the Quarterly Census on Employment and Wages. Most extant research on minimum wages does not detect significant effects on workers age 20 and over. Some observers attribute the lack of visible effects to the relatively small proportion of adults who were affected by past minimum wage increases in the U.S.4 These observers argue that minimum wage effects should be detectible by examining groups that are more affected, notably teens and restaurant workers (Brown 1999). Economists have therefore focused on these two groups. After two decades of methodological controversy among researchers, the literature has produced some areas of agreement. In particular, recent studies of the effects on restaurant workers by researchers with opposing methodological views have arrived at a consensus: the employment effects are either extremely small or non-existent.5 The effects of minimum wages on teen employment remain somewhat controversial. Some researchers find significant but not large negative effects (Neumark, Salas, and Wascher 2014) while others find effects that are much smaller, close to zero (Allegretto et al. 2015). The remaining controversy over effects on teens has become less relevant than it once was. While teens once represented one-fourth of all workers affected by minimum wages nationwide, their importance has fallen to less than half that level today. We find that teens represent only 4.5 percent of the workers who would be affected by the proposed $15 Santa Clara County minimum wage. Moreover, compared to teens, the rest of the low-wage workforce is older and has more work experience and schooling than was the case in previous decades. Results that are specific to teens are therefore not as informative for the effects on the workforce as a whole. This minimum wage research uses quasi-experimental methods, exploiting time and state variation between 1979 and 2012 in federal and state minimum wages to identify causal effects. The most credible of the studies use state of the art statistical methods to ensure that the causal comparisons are apples to apples. However, the minimum wage changes in these past experiences, which peak at about $10, generated increases for at most 8-10 percent of the workforce. In contrast, approximately 31 percent of all workers would receive a wage increase in the $15 San Jose scenario and 25 percent in the $15 Santa Clara County scenario, far higher than is the case in the minimum wage research literature to date. As a result, this previous research is at best only suggestive of the effects we consider here. 8.A. - Page 30