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Title: The Employment Effects of a $15 Minimum Wage in the U.S. and in Mississippi: A Simulation Approach

Citation Type: Miscellaneous

Publication Year: 2019

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Abstract: The Effects of a $15 Minimum Wage by 2024 in the US and Mississippi 2 PREFACE Minimum wages can have both positive and negative effects on employment. HR 582, the Raise the Wage Act of 2019, would phase in minimum wage increases over six years, to $15 by 2024 throughout the U. S. In 2017, we conducted, but did not release, a comprehensive analysis of the effects of a similar bill-The Raise the Wage Act of 2017. That bill also proposed to increase the federal minimum to $15 in 2024, but over eight years. Our 2017 report found a very small positive effect-of about 0.1 percent of employment, for the U.S. as a whole and for Mississippi, our lowest-wage state. These findings are highly pertinent to assessing the effects of the 2019 bill. We present this earlier work here to inform current policy discussion. Developments since 2017 indicate that our report overstates the pay and employment effects of the 2019 bill. Two states-Illinois and New Jersey, as well as the District of Columbia-subsequently enacted their own paths to a $15 minimum wage. Two additional states-Arkansas and Missouri-voted in 2018 to increase their state minimum wages. And a number of large businesses, notably Amazon in 2018, implemented $15 minimum wages for their workforces. Moreover, annual wage growth has accelerated since we conducted our analysis, from about 2.5 percent then to about 3 percent in 2018. These public and business policy developments and the higher rate of recent wage increases imply that HR 582 would increase pay and affect employment by somewhat smaller amounts than we analyze here. How much smaller? Cooper (2017) estimated that the 2017 bill would raise pay for about 41.5 million workers. In his 2019 update, Cooper estimates that the 2019 bill would raise pay for about 39.7 million workers, or about 96 percent of his earlier estimate. Using this benchmark, one can obtain the 2019 adjusted estimates by multiplying the pay and employment estimates in our 2017 report by 96 percent. For a related and more recent discussion, including an expanded analysis suggesting that the minimum wage increase will have more positive effects in Mississippi and other low-wage states than in more affluent states, see Michael Reich (2019), "What are the Likely Effects of a $15 Federal Minimum Wage by 2024?" http://irle.berkeley.edu/likely-effects-of-a-15-federal-minimum-wage-by-2024/ The Effects of a $15 Minimum Wage by 2024 in the US and Mississippi 3 CONTENTS

Url: http://irle.berkeley.edu/likely-effects-of-a-15-federal-

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Authors: Reich, Michael; Allegretto, Sylvia; Montialoux, Claire

Publisher: Institute for Research on Labor and Employment

Data Collections: IPUMS USA

Topics: Labor Force and Occupational Structure

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