Our results indicate that a $15 statewide minimum wage would generate a 23.4percentt average wage increase for 3.16 million workers in the state.
Yet, just taking the more conservative federal cost-of-living estimates and applying them to the minimum wage to generate an equivalent buying power shows the threat to El Centro and other low-cost California communities.
First, the population studied varies, and this and other factors can influence how binding the minimum wage is, generating variation in estimated effects that there is no reason to simply average.
Increasing the minimum wage will generate an estimated $60 billion in spending.
Those analyses in California and New York indicate that such larger minimum wage increases generate correspondingly larger boosts in consumer spending, that offset much of the higher costs to businesses.
However, the evidence is strongly consistent with the neoclassical model, in that most research on minimum wages confirms that they generate disemployment effects.
Our conjecture is that the within-region and within-period variation is driven more by unmeasured variation in low-skill labor market conditions to which policymakers respond by raising minimum wages when these conditions are strong, generating positive bias in the estimated employment effect of minimum wages.
"But let's also remember that the cost of living is different in Manhattan than in Little Rock and many other places". "Making 15 the new 10, in terms of minimum wage increases, could potentially generate more harm than good," Harry J. Holzer, a former chief economist at the Labor Department under President Bill Clinton, wrote last month.
Now, new associates still earn less than minimum wage, but the increased revenue generated by higher prices is paid to employees as a separate "revenue wage," which brings their compensation back to an amount similar to what they earned before the no-tips policy took effect.
2. Minimum Wages, David Neumark and William L. Wascher.
