The minimum wage and poverty among full-time workers

V. Conclusions The empirical evidence is strong that minimum wages have had little or no effect on poverty in the U.S. Indeed, the evidence is stronger that minimum wages occasionally increase poverty. It also suggests that the minimum wage does not even lower poverty for the one group that, almost by definition, one would expect to be helped: full-time, year-round workers. While the empirical results suggest minimum wages do not achieve what is ostensibly their primary goal — relieving poverty among the working poor — minimum wages do seem to impose a real cost on society in terms of lost income and output. The empirical evidence on work hours suggests that a $1 increase in the minimum wage, far from being almost costless, could conceivably impose income losses to American workers in the $12-15 billion range per year — an amount equal to the “income deficit” of millions of persons counted as poor by the U.S. Bureau of the Census.     

Comparative advantage and the welfare effects of uniform wage policies

This paper analyzes the theoretical impact of a commonly cited union goal — the elimination or reduction of wage differentials within occupations. By dropping the usual assumption of homogeneous labor, we show how, and under what market conditions, workers will receive rents due to individual comparative advantage. In competitive labor markets a union-imposed uniform wage may lower the earnings of workers holding a productive advantage, causing a reduction in employment and a welfare loss of comparative advantage rents. The implications of a strict uniform wage rule imply that unions may be forced to adapt their wage policy to allow more productive workers to receive wage differentials. This consideration helps explain some common trade union institutions.     

Contract length,wage indexation,andex ante variability of real wages

This paper proposes a new measure for the insurance value of a cost of living escalator (Cola) — theex ante uncertainty of real wages over the life of the contract. We use a sample of 3,224 U.S. collective bargaining agreements to find that indexation lowers and large contract duration raises this uncertainty. The positive association of Colas and contract length implies that when workers obtain a Cola, a portion of itsceteris paribus insurance value is diminished through the resulting longer contract length.     

Unionization and nonunion wage patterns:

conclusion We argue that a nonunion worker’s support for unionization depends not only on the expected gain in wages, but also on the probability of retaining employment after union-ization. Incorporating this point generates no prediction that low-wage workers will receive the largest threat-induced supplements as they are the ones who are least likely to retain their jobs after unionization. In short, which group of workers will receive the largest union induced wage supplement is ambiguous.     

The economic effects of labor unions revisited

Using a variety of statistical techniques, we conclude that labor unions have reduced U.S. output by significant amounts —trillions of dollars over time. Additionally, the employment- population ratio and the unemployment rate have been adversely affected by the presence of unions. From the very beginning, unionization materially lowered employment in the auto and steel industries, and union militancy in coal mining has contributed importantly to largely eliminating employment in this once large industry. While some individual workers have profited from unions, the aggregate economic impact is strongly negative.     

The Economic Value of Bilingualism for Asians and Hispanics1

This study examines how bilingualism affects the wages of Asian and Hispanic workers using 2000 Census data. In contradiction to the general belief that bilingualism can provide a competitive advantage in the labor market, we find no evidence that 1.5‐generation and U.S.‐born Asian and Hispanic bilingual workers generally have higher wages than their English monolingual co‐ethnics; in some cases, in fact, their wages are significantly lower. In search of specific circumstances under which bilingualism might provide an economic advantage, we also examine interactions of language with such variables as education, employment in the public rather than the private sector, and the size of the population of mother‐tongue speakers. With limited exceptions, we find no sign of greater economic returns to bilingualism. Since bilingualism requires considerable effort to maintain across generations in the United States, we conclude that the virtual absence of economic rewards for it creates pressure for linguistic assimilation.     

Wage differentials within a female‐dominated occupation: Domestic workers in informal and flexible jobs in Portugal

The authors use an original cross‐sectional data set to examine the impact of informal and flexible contractual arrangements on the wages of domestic workers hired by private employers in Portugal. OLS estimations suggest that formality benefits workers, whether they have a stable or a flexible contract. However, social and labour market processes help to shape and maintain inequality, especially for migrant workers. Although skills are undervalued and do not generate rewards, higher wages are identified for workers who are engaged in contingent work, work for multiple employers or provide care for the elderly. However, such workers are still subject to exploitation and insecurity.     

State minimum wage laws: Youth coverage and impact

Federal minimum wage statutes cover only 70 percent of the work force and 30 percent of all employers. State laws are designed to close some of these coverage gaps and in some cases to set higher wage floors. Hence, differences in state wage floors and coverage should affect employment rates and wage distributions, particularly among low-skilled workers. Evidence from the National Longitudinal Ssurveys of Youth is mixed, however: State wage floors appear to have no impact on youth employment or entry wages, but coverage exemptions appear to increase both employment and wages. These observations underscore the need to include state provisions in models of minimum wage impacts, particularly for later periods (e.g., 1988–1991) when state wage floors were relatively higher.     

Nonstandard Employment in the Nonmetropolitan United States*

Abstract We examine the prevalence of nonstandard employment in the nonmetropolitan United States using the Current Population Survey Supplement on Contingent Work (1999 and 2001). We find that nonstandard work is more prevalent in nonmetropolitan than in central city or suburban areas. Logistic regression models controlling for sociode‐mographic and work characteristics, show that nonmetropolitan workers experience higher odds of nonstandard employment than central city or suburban workers. Variations in industrial and occupational structures in nonmetro and metro areas do not explain residential differences in nonstandard work. We also estimate the odds of employment in each of the three components of nonstandard work: contingent work, part‐time, and varied hour work. Nonmetropolitan workers are more likely than central city and suburban workers to be employed in contingent or varied hour work. The benefits and wages of nonstandard work are lower than for standard work across residence areas. The results highlight the importance of understanding nonstandard work and the components of nonstandard work, particularly when considering the nature of work across industries, occupations, and residence.     

Employment growth in the temporary help supply industry

During the 1980s, a significant increase occurred in the employment of temporary workers — employees hired for a specific task and for a limited duration — because of changing economic conditions that raised both the demand for and supply of temporary workers. Using time-series data, we investigate the factors that influenced temporary employment growth by analyzing the expansion in the temporary help supply (THS) industry. On the demand side, increasing aggregate output and heightened foreign competition were the most important factors that encouraged firms to hire temporary workers. On the supply side, increasing participation of certain demographic groups, notably married women, shifted the supply curve of temporary workers outward. We thank Nathan Balke, Bonnie Fisher, and Jeff Mills for helpful comments.     

Noncitizen Employment and the Wages of Healthcare Support Workers in the US

This study examines the relative wages of citizens and noncitizens employed as healthcare support workers as well as examines the effect of noncitizen support worker employment on the wages of citizen support workers. Relative wage findings reveal noncitizen support workers with less than eight years of US residency receive a noncitizen-citizen wage discount statistically significantly greater than the legal maximum of 5% below the local prevailing wage. These low relative wage levels could contribute to lower wages for citizen support workers, however elasticity of substitution findings suggest noncitizen support workers are not close substitutes for healthcare support workers who are US citizens. In addition, wage effect findings do not reveal a negative influence of noncitizen employment on the wages of native born US citizen support workers, while these findings reveal a relatively small wage decline for naturalized support workers. These findings are consistent with the citizen status job heterogeneity hypothesis. Nonetheless, finding noncitizen-citizen wage differences does not allow for ruling out the possibility of weak enforcement of prevailing wage legislation and possible employment of undocumented workers.     

Evolution of the professional contingent workforce

The market for professional contingent workers (PCW) has evolved into one of the fastest growing segments of the temporary labor force in the socalled “new economy.” To better understand the evolution and success of the professional contingent market, I utilize a new paradigm. Three dimensions are added: First, supplyside characteristics among PCW are analyzed in aggregation. Second, the role and market contribution of intermediaries, such as staffing groups, are stipulated. Finally, interaction among the parties—PCW, staffing groups, and client firms—is viewed as symbiotic. Within the structural framework established by client firms and staffing groups, PCW create value and scale economies for all parties. Empirical results confirm the hypothesis that PCW professionalism assures the vitality of the market.     

Minimum wages and the wessels effect in a monopsony model

The Wessels model suggests that firms respond to increases in the minimum wage rate by decreasing the level of fringe benefits — an action which produces an inefficiency effect that lowers workers’ utility and the supply of labor. Standard models of monopsony, however, argue that wage floors prevent the exercise of market power and increase employment. I show that wage floors, even with fringe benefit curtailment, may increase employment by lowering the marginal expense of labor. Employee utility and employment will rise somewhat but not as much had the firm acted competitively in setting both wages and fringes.     

The impact of unions on job satisfaction,organizational commitment,and turnover

Conclusion The research on the exit-voice hypothesis, both in the United States and abroad, shows convincingly that most of the variance in the negative union effect on job satisfaction can be accounted for by job quality, industrial relation climate, and wages. Union members see their jobs as less attractive than do nonunion workers in terms of skill requirements, task complexity, the amount of autonomy or discretion available, and opportunities for promotion. Union members also perceive the supervision they receive and the labor-management relations they experience as less satisfactory. They are, however, clearly better off with respect to wages, benefits, and pensions. But when it comes to job satisfaction, the economic advantages of union jobs are not sufficient to compensate for job content and work environment factors. It comes as no surprise to the job satisfaction researcher that job content — the nature of the tasks people are given to do — weighs heavily in overall job satisfaction scores. While there are individual differences in the degree to which people prefer intrinsically interesting jobs, there is ample empirical evidence showing that autonomy, skill variety, complexity, challenge, and advancement are important determinants of people's affective reactions to their jobs (Deci, 1975; Hackman and Oldham, 1980; Kanfer, 1990). The relative importance of job content factors to overall job satisfaction is also mirrored in the most commonly used measures of job satisfaction (Weiss et al., 1967).     

Training,Technological Changes,and Displacement

By matching industry/occupation data on training to displaced worker data from the Current Population Surveys, this paper analyzes why many older workers were displaced by technological changes in the 1990s, and why these workers incurred large earnings losses. When technological changes depreciate the existing stock of firm-specific human capital, older workers who receive higher wages from the sharing arrangement of the returns to investment in firm-specific human capital are dismissed as firms find it unprofitable to retain them. These displaced workers have higher predisplacement wages with steeper wage–tenure profiles, and hence incur larger earnings losses after displacement than other displaced workers.

Efficiency Wages,Unemployment Benefits and Union—Firm Wage Bargaining: The Issue of the Choice of the Outside Option

This paper points out that there may be a logical consistency issue in choosing the reference wage in efficiency wage models. We have shown that defining the outside option in the efficiency wage logic as the market-clearing wage solves this difficulty, and is justifiable in terms of the assumed behaviour of workers and employers. The model that we examine confirms earlier findings of reinforcing effects between union-firm bargaining and efficiency wages. However, if union preferences vary between wages and employment, Summers’ reinforcing effect is no longer present for each value of the parameter describing these preferences. Above a certain threshold value of union preferences for employment, the two mechanisms do not reinforce each other anymore.     

EMPLOYMENT AND DEADWEIGHT LOSS EFFECTS OF OBSERVED NONWAGE LABOR COSTS

To assess the employment effects of labor costs, it is crucial to have reliable estimates of the labor cost elasticity of labor demand. Using a matched firm‐worker data set, we estimate a long‐run unconditional labor demand function, exploiting information on workers to correct for endogeneity in the determination of wages. We evaluate the employment and deadweight loss effects of observed employers' contributions imposed by labor laws (health insurance, training, and taxes) as well as of observed workers' deductions (social security and income tax). We find that nonwage labor costs reduce employment by 17% for white collars and by 53% for blue collars, with associated deadweight losses of 10% and 35% of total contributions, respectively. Since most firms undercomply with mandated employers' and workers' contributions, we find that full compliance would imply employment losses of 4% for white collars and 12% for blue collars, with respective associated deadweight losses of 2% and 6%. (JEL J23, J32)     

Occupational licensing and the transition from welfare to work

Occupational licensing laws erect barriers to entry into various labor markets, impeding the upward mobility of welfare recipients seeking to transition into employment. This paper, recognizing that labor market interventions have often been used precisely because of this effect, proceeds to examine various restrictions which directly affect low-skilled workers in the U.S. economy who now have stronger incentives to participate in labor markets in response to recent welfare policy reforms. Three distinct types of labor market restrictions are identified: (1) the licensing of professional, high-skilled occupations tends to crowd workers into lower-skilled occupations, lowering such wages and thus weakening work incentives among the welfare population; (2) quantity license restrictions (permits which set quotas limiting the overall number of suppliers in a market) suppress demand for low-skilled workers, and may substantially reduce work opportunities and, thus, incentives. Taxi license restrictions alone, for instance, may result in several hundreds of thousands of lost employment opportunities throughout the United States; and (3) quality license restrictions, where entrants face higher entry costs (typically through educational requirements above the requirements of the market), may paradoxically provide welfare recipients with enhanced opportunities for employment, particularly when coupled with job-training subsidies typically extended to welfare recipients. This we call a “de facto liberalization” of occupational licensure. While incumbent workers are certain to resist enhanced entry by welfare recipients into licensed occupations, vocational schools should aggressively support such entry, affording a possible realpolitik to the migration path envisioned. More interestingly, once entry has accelerated under de facto liberalization, occupational license rents will predictably decline, thus increasing the likelihood of explicit liberalization, and further opening labor markets to competitive entry.     

Failing to Make Ends Meet: Dubious Financial Success Among Employed Former Welfare to Work Program Participants

To many, declining caseloads and increased labor market entry substantiate welfare reform’s success. This study examines how Louisiana welfare to work program participants who succeeded by leaving assistance and obtaining employment are making ends meet, if their needs are met and which characteristics are associated with having their needs met. Telephone survey data reveal low wages, informal labor market activity, government, community, and social support use, and notable levels of unmet needs. A multivariate analysis shows workers with higher earnings and regular nonmonetary help from family and friends are likely to have more needs met. Those likely to have fewer needs met report lower wages, more young children, use of government support programs and informal labor market activity.