EPI’s Elise Gould has a nifty bit of analysis that deserves attention. When looking at the most recent real wage trends by decile, she finds real losses in every decile except one: the first decile, aka the tenth percentile, which was essentially unchanged (up 0.3%).
Why might low-wage workers, of all people, buck the trend of real wage declines between the first half of last year and this year? Elise says: “Simple—several states raised their minimum wage over that period.”
In fact, 13 states raised their minimum wages in 2014 (see the list below). Elise compares the 10th percentile wage growth among these thirteen states that increased their minimums with the rest that did not. The results are the first two bars in the figure below.
Real wages for low-wage workers rose by just about 1% over the past year in the states that raised their minimum wages, and were flat (down 0.1%) in the other states.
OK, but did those increases bite into employment growth, as opponents typically insist must be the case? Not according to the other two sets of bars. They show that payroll employment growth was slightly faster in states that raised, and the decline in unemployment, slightly greater.
Now, these are all small changes and I wouldn’t make a federal case out of any of them. But I would forcefully assert that they clearly do not comport with the doomsday scenarios touted by the opponents of minimum wage increases.
The conclusion is one that’s especially relevant this week as the inadequacy of low-wage workers’ earnings and their actions to improve them are about to be back in the news. Contrary to the forces opposing a higher wage floor, the low-wage workers at greatest risk are not the ones who live in states that are raising their minimum wages; it’s the rest of ‘em.
Source: Elise Gould, EPI; BLS (employment growth is percent change in payrolls; unemployment decline is percentage point changes in the rates).
Note: States that raised their min wg in 2014: AZ, CA, CT, FL, MO, MT, NJ, NY, OH, OR, RI, VT, WA. (H/t: BDaS)