Policy Studies Economic Mobility

Job-destroying effects of $15 minimum wage by metro, industry and occupation

Authors

Andrew Hanson
Former Associate Fellow
Zackary Hawley
Assistant Professor of Economics, Texas Christian University

Executive Summary

  • A $15 hourly minimum wage is already legislated to become law in select, high-cost metropolitan areas and across the entire state of California. The Democratic Party officially made a $15 hourly federal minimum wage part of its platform in 2016. We examine the impact of regulating a $15 hourly federal minimum wage across distinct metropolitan areas and industries in the United States. Our analysis uses data on the wage distribution by metropolitan area and industry down to the occupation level.
  • The U.S. labor market is made up of a set of highly heterogeneous and spatially diffuse metropolitan areas. Each of these areas has a unique mix of industries, workers, wage levels and local policies. A $15 hourly minimum wage would interact differently with each labor market to produce drastically different effects across areas and industries. The proposed policy would be binding for fully 62 percent of the employed population in Brownsville-Harlingen, Texas, but only for 22 percent of the employed population in San Francisco.
  • A $15 hourly minimum wage would represent a dramatic increase in labor costs for many employers and the cost increase would be spread unevenly across industries, metropolitan areas and the wage distribution. In Dallas, employers of workers in the bottom percentile of the wage distribution would see a nearly 80 percent labor-cost increase imposed, while employers of workers in the 25th percentile would have a 40 percent labor-cost increase imposed. In Seattle, a $15 hourly minimum wage would represent a 40 percent labor-cost increase on nearly the entire bottom decile of the distribution.
  • Employment loss would result from the labor-cost increase under a $15 hourly minimum wage. We estimate the New York metropolitan alone would lose approximately 170,000 jobs, while Los Angeles, Chicago and Houston would each lose more than 100,000 jobs. Nationally, 1.7 million workers in the food preparation and serving industry—representing nearly 18 percent of all covered workers—would lose their jobs under a $15 hourly minimum wage. More than 900,000 workers in office and administrative support occupations would lose their jobs, totaling nearly 12 percent of all covered workers.
  • Job loss under a $15 hourly minimum wage would be concentrated among the very poorest workers in metropolitan areas. In Chicago, 28 percent of job losses would be concentrated among workers in the bottom decile of the wage distribution, while 38 percent of job losses in Boston would be concentrated among the poorest 10 percent of wage earners.

Read the full study here.

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