The State Employment Impact of a $15 Minimum Wage - January 2021

THE STATE EMPLOYMENT IMPACT OF A $15 MINIMUM WAGE 4 The Movement to Raise the Federal Minimum Wage Since its inception nearly a century ago, the inflation-adjusted value of the United States federal minimum wage has fluctuated from its lowest, $4.14 in 1948, to its highest, $10.28 in 1963.5 Since 1990 as the nominal federal minimum wage has risen rapidly from $3.35 per hour, the inflation-adjusted. [...] David Macpherson This study uses methodology similar to that employed by the Congressional Budget Office (CBO) in their 2019 analysis of the consequences of an increase in the federal minimum wage to examine the impact of proposed legislation that would increase the hourly minimum wage to $15.00.24 We investigate the impact of proposed legislation that would increase the federal hourly minimum wag. [...] For tipped workers, we estimate the number of people whose cash wage (i.e., the hourly wage paid by the employer, excluding tips) is between the state’s forecasted tipped minimum and the proposed tipped minimum wage in 2027 ($12.60) After estimating which workers are affected by the proposed minimum or tipped minimum wage, we estimate the increase in the hourly cost to the employer. [...] For non-tipped workers, the increase in the cost is the difference between the proposed $15.00 minimum wage and the wage we predict for the worker in 2027. [...] For the $15.00 minimum wage, the elasticity for affected teenagers (workers aged 16-19) is -0.822, and for affected adults, the elasticity is -0.266.33 The estimated job loss is calculated by summing across all affected workers the product of the relevant elasticity, the percentage increase in the hourly cost to employers resulting from the proposed change, and the worker’s earnings weights adjust.