Some new research — “Evidence of The Unintended Labor Scheduling Implications of The Minimum Wages” — shows that every $1 an hour increase in government-mandated minimum wages (“political wage-setting”) leads to the following (mostly) adverse outcomes:
-a 27.7% increase in the total number of workers scheduled to work each week
-a 20.8% decrease in the average number of hours each employee worked per week
-For an average store in California, these two changes above translated into four extra workers per week and five fewer hours per worker per week, resulting in a 13.6% decrease in the total wage compensation of an average minimum wage worker
-a 23% decrease in the percentage of employees working more than 20 hours per week (making them eligible for retirement benefits)
-a 14.9% decrease in the percentage of employees working more than 30 hours per week (making them eligible for health care benefits)
-a 33% increase in fluctuations in the number of hours worked per week
-a 9.5% increase in fluctuations in the number of hours worked per day
-a 9.8% increase in fluctuations of shift start times and
average net losses of at least $1,590 per year per employee, equivalent to 11.6% of workers’ total compensation (assuming that workers were able to use their reduced hours to work a second job — an assumption which may not hold true for many employees).
Here’s a summary of the research from the authors in the Harvard Business Review (“Research: When a Higher Minimum Wage Leads to Lower Compensation“):
While proponents of increasing the minimum wage have grown increasingly vocal in the U.S., new research suggests that raising the minimum wage can actually have a significant negative impact on the total compensation of hourly workers. Researchers analyzed a detailed dataset of wage and scheduling data for more than 5,000 employees at a single national retailer, and compared outcomes for workers in California (which had several minimum wage increases during the study period) and Texas (which had zero increases). They found that in the stores that experienced a minimum wage hike, workers on average worked fewer hours per week, were less likely to qualify for benefits, and had less-consistent schedules. These factors corresponded to an average 11.6% decrease in total compensation for every $1 increase in the minimum wage. Based on these findings, the authors argue that policymakers should consider minimum wage hikes with caution, and should be sure to complement them with policies designed to ensure consistent schedules and adequate hours for workers — or risk harming the very people they’re aiming to support.
And here’s the conclusion from the HBR article:
When it comes to assessing the impact of minimum wage on worker welfare, economists and policymakers tend to emphasize employment rates alone. But our study shows that other factors, such as benefits and worker schedules, can make a major difference. Even if overall employment rates remain constant, increasing the minimum wage can lead firms to make strategic shifts in their labor scheduling practices that can ultimately have a substantial, negative effect on the welfare of the very workers these policies aim to protect.
-For an average store in California, these two changes above translated into four extra workers per week and five fewer hours per worker per week, resulting in a 13.6% decrease in the total wage compensation of an average minimum wage worker
-a 23% decrease in the percentage of employees working more than 20 hours per week (making them eligible for retirement benefits)
-a 14.9% decrease in the percentage of employees working more than 30 hours per week (making them eligible for health care benefits)
-a 33% increase in fluctuations in the number of hours worked per week
-a 9.5% increase in fluctuations in the number of hours worked per day
-a 9.8% increase in fluctuations of shift start times and
average net losses of at least $1,590 per year per employee, equivalent to 11.6% of workers’ total compensation (assuming that workers were able to use their reduced hours to work a second job — an assumption which may not hold true for many employees).
Here’s a summary of the research from the authors in the Harvard Business Review (“Research: When a Higher Minimum Wage Leads to Lower Compensation“):
While proponents of increasing the minimum wage have grown increasingly vocal in the U.S., new research suggests that raising the minimum wage can actually have a significant negative impact on the total compensation of hourly workers. Researchers analyzed a detailed dataset of wage and scheduling data for more than 5,000 employees at a single national retailer, and compared outcomes for workers in California (which had several minimum wage increases during the study period) and Texas (which had zero increases). They found that in the stores that experienced a minimum wage hike, workers on average worked fewer hours per week, were less likely to qualify for benefits, and had less-consistent schedules. These factors corresponded to an average 11.6% decrease in total compensation for every $1 increase in the minimum wage. Based on these findings, the authors argue that policymakers should consider minimum wage hikes with caution, and should be sure to complement them with policies designed to ensure consistent schedules and adequate hours for workers — or risk harming the very people they’re aiming to support.
And here’s the conclusion from the HBR article:
When it comes to assessing the impact of minimum wage on worker welfare, economists and policymakers tend to emphasize employment rates alone. But our study shows that other factors, such as benefits and worker schedules, can make a major difference. Even if overall employment rates remain constant, increasing the minimum wage can lead firms to make strategic shifts in their labor scheduling practices that can ultimately have a substantial, negative effect on the welfare of the very workers these policies aim to protect.
Someone is probably surprised.
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