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Where Does the Minimum Wage Bite Hardest in California?

Author

Listed:
  • Even, William E.

    (Miami University)

  • Macpherson, David A.

    (Trinity University)

Abstract
This study uses employment data on California county-industry pairs (CIPs) between 1990 and 2016 to test whether minimum wage increases caused employment growth to slow most in the CIPS with a large share of low wage workers. Evidence supports the hypothesis, and we use the estimates to simulate the effect of a 10 percent increase in the minimum wage. The simulations suggest that a 10 percent increase could cause a 3.4 percent employment loss in the average CIP in California. The job loss is projected to be concentrated in two industries: accommodation and food services, and retail. While the most populated counties of California are expected to incur the largest employment loss in terms of the number of workers, the smaller counties generally experience a larger percentage point loss in employment due to the lower wages and the greater number of workers that would be affected by the minimum wage hike. Moreover, there is substantial variation across counties in terms of the percentage of jobs lost within a given industry.

Suggested Citation

  • Even, William E. & Macpherson, David A., 2018. "Where Does the Minimum Wage Bite Hardest in California?," IZA Discussion Papers 12000, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12000
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    References listed on IDEAS

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    1. David H. Autor & David Dorn & Gordon H. Hanson, 2015. "Untangling Trade and Technology: Evidence from Local Labour Markets," Economic Journal, Royal Economic Society, vol. 0(584), pages 621-646, May.
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    5. Congressional Budget Office, 2014. "The Effects of a Minimum-Wage Increase on Employment and Family Income," Reports 44995, Congressional Budget Office.
    6. David Neumark, 2015. "The effects of minimum wages on employment," FRBSF Economic Letter, Federal Reserve Bank of San Francisco.
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    12. Ekaterina Jardim & Mark C. Long & Robert Plotnick & Emma van Inwegen & Jacob Vigdor & Hilary Wething, 2017. "Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle," NBER Working Papers 23532, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Winters, John V., 2022. "Minimum Wages and Restaurant Employment for Teens and Adults in Metropolitan and Non-metropolitan Areas," IZA Discussion Papers 15499, Institute of Labor Economics (IZA).
    2. Loukas Karabarbounis & Jeremy Lise & Anusha Nath, 2022. "Minimum Wages and Labor Markets in the Twin Cities," NBER Working Papers 30239, National Bureau of Economic Research, Inc.
    3. Jonathan E. Leightner & Eric Jenkins, 2024. "Inflation’s Reduction of the Real Minimum Wage and Unemployment in the USA: 1987 to 2021," Journal of Economic Analysis, Anser Press, vol. 3(3), pages 126-137, September.
    4. David Neumark & Peter Shirley, 2022. "Myth or measurement: What does the new minimum wage research say about minimum wages and job loss in the United States?," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 61(4), pages 384-417, October.

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    More about this item

    Keywords

    minimum wage; employment; California; labor demand;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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