1 / 19

A STUDY OF THE IMPACT OF RAISING THE MINIMUM WAGE IN SOUTH DAKOTA

Benefits

viviana
Download Presentation

A STUDY OF THE IMPACT OF RAISING THE MINIMUM WAGE IN SOUTH DAKOTA

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. A STUDY OF THE IMPACT OF RAISING THE MINIMUM WAGE IN SOUTH DAKOTA Ralph J. Brown Dennis A. Johnson University of South Dakota

    2. Benefits & Costs of a Higher Minimum Wage There are Benefits to raising the minimum wage. Higher wages for some low-wage earners. May reduce poverty. Stimulate the economy. Provide equity and fairness. There also Costs to raising the minimum wage. Some low-skill workers may lose their job. Raise barriers to low-skill workers. Employers will pay more. Higher prices due to higher costs

    3. How Many Workers Would be Affected? 6,729 workers earn $5.65 or less, 14,621 workers earn $6.00 or less, 18,003 workers earn $6.15 or less, 22,513 workers earn $6.35 or less.

    4. Counties With High Concentration of Low Wage Workers

    5. Industries with Concentration of Low Wage Workers ($6.00)

    6. Number of Low-Wage Workers by Region, 2004

    8. A Binding and Non-Binding Minimum Wage

    9. What is the Wage Elasticity? Wage elasticity is small, statistically significant, and economically important. Consensus -0.10 to -0.30 A 10% rise in the minimum wage causes a 1% to 3% fall in employment. We choose -0.20 or a 10% rise in the minimum wage causes a 2% fall in employment.

    10. Evidence Until 1990s, strong consensus of wage elasticity of -0.10 to -0.30 In 1992, series of articles by Card, Krueger, and Katz challenged consensus view They found a minimum wage increase has no impact of slightly positive effect on employment A large number of articles challenging the no-impact conclusion followed Most of these of articles showed a negative response

    11. Evidence (2) 1998 article in Journal of Economic Literature a survey of labor economists at the top-40 economics departments indicated a median response of elasticity of -0.10 and a mean response of -0.21 We are comfortable with an estimate of -0.20

    13. Impacts of Increasing the Minimum Wage in South Dakota

    15. Summary Q: Does an increase in the minimum wage benefit low-wage workers? A: Yes, it raises the income for many low-wage workers. Q: Do some workers lose as a result of an increase in the minimum wage? A: Yes, the workers who find themselves without a job will be worse off.

    16. Summary (2) Q: Do some employers lose as a result of the minimum wage increase? A: Yes, those employers who have to pay higher wages to the workers who retain their jobs will be worse off. Q: Do some employers lose as a result of employing fewer workers than before the increase? A: Yes, those employers who lose profits from employing fewer workers due to the higher wage.

    17. Summary (3) Q: Overall, are workers better off as a result of the minimum wage increase? A: Yes, the gains in income from the workers who retain their jobs are greater than the losses suffered by workers who lose theirs. Q: Overall, are employers better off as a result of the minimum wage increase? A: No, they must pay higher wages than before and lose the profits they would have earned on the marginal workers who are now disemployed

    18. Summary (4) Q: Is society better off as a result of a higher minimum wage? A: No, society is worse off if the well-being of society is measured by society’s income. Increasing the minimum wage reduces total societal income as a result of the job losses suffered by some workers and the lost profits to employers who would have profitably employed them.

More Related