Monday, June 2, 2014

Another Look at Minimum Wage Labor Force

The other day, I looked at this relationship.

In that post I looked at the annual change in the number of minimum wage workers compared to the annual change in the relative minimum wage:

I also looked at the historical levels of minimum wage employment to historical relative minimum wage levels, compared to the EPI estimates:

In this post, I thought I would compare the scatterplot of annual changes to the trendline that would be implied by the EPI estimate:

Also, I have extended the linear trend of the EPI estimate to the minimum wage levels that were in place back to 1979 (about $11.90 in current dollars, as a proportion of average wages):

It simply seems implausible to me that this relationship has shifted to this degree.  Assuming no job losses and a linear behavior (which is probably conservative compared to EPI's accelerating curvilinear trend), at a minimum wage of $11.90, the EPI trend would imply that 20% of the labor force is currently working at that wage level or less.

Just to clarify, the notion that MW causes some job loss only proposes that some portion of this huge difference is due to job loss.

The notion that MW causes no job loss would depend on this entire shift being due to an exogenous shift in wage distribution.  It would have to depend on an average increase in minimum wage workers as the MW increased that is incrementally steeper than it has ever been in any single annual data point in the last 35 years, including the most recent MW increases.

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