What is the impact of the minimum wage on workers’ wages? The results of a Harvard research
What are the real effects of a minimum wage and its variation? There are several researches on the subject and in this article we want to offer you the experience of Qiuping Yu, Shawn Manka and Masha Shunko on the subject, published by the Harvard Business Review.
The scientific article published in the Harvard Business Review analyzes the effects of an increase in the minimum wage on various aspects of workers' compensation. In reality, the issue is much more complex than one might think: economists remain uncertain about the long-term impact of these policies on the well-being of workers, in this case the Americans being studied. Some studies suggest that raising the minimum wage has a small negative effect on employment rates, while others find no negative effect on employment.
Part of the difficulty of quantifying the impact of minimum wage policies lies in the fact that they can influence firm behavior in a number of complex and interconnected ways. In addition to changing employment rates, studies suggest that firms can strategically respond to minimum wage hikes by changing their approaches in other areas, such as workers' hours. This can have significant implications for worker well-being, but data on scheduling is often more difficult to obtain than data on employment.
What did Harvard research find? The main finding is that an increase in the minimum wage has positive effects on hourly wages, but negative effects on other components of wages, such as bonuses, tips, hours worked, and the likelihood of being fired. So the balance of benefits or disadvantages for workers is much more subtle than it appears on the surface.
To be specific, the analysis found that raising the minimum wage did not have a statistically significant impact on the total number of hours worked in a given store. In other words, stores hired workers for the same aggregate number of hours regardless of the minimum wage increase.
That's not all: the data suggests that the way these hours have been distributed among workers is likely to change. For every $1 increase in the minimum wage, we found that the total number of workers scheduled to work each week increased by 27.7%, while the average number of hours worked by each worker decreased by 20.8%. For an average California store, these changes translated to four more workers per week and five fewer hours per worker per week, meaning that the total pay for an average minimum wage worker in a California store has actually decreased. by 13.6%. An unexpected redistributive effect, but what was wanted by the workers?
This decrease in the average number of hours worked not only reduced total wages, but also affected eligibility for US welfare benefits. The researchers found that for every $1 increase in the minimum wage, the percentage of workers who work more than 20 hours a week (which makes them eligible for retirement benefits) decreased by 23.0%, while the percentage of workers working more than 30 hours a week (making them eligible for health benefits) decreased by 14.9%. This suggests that, as the minimum wage increases, firms can strategically change their scheduling practices to reduce the number of workers who are eligible for benefits: Estimates indicate that the average outlet in our California data set has recovered about 27.5% of wage costs increase through savings associated with reduced benefits and, ultimately, for many workers, these changes in minimum wage have resulted in a decline in workers' rights.
These effects are most pronounced for low-income workers, those with less experience, and those working in more competitive sectors. The authors suggest that firms seek to offset rising wage costs by reducing other forms of compensation or downsizing the workforce. Furthermore, the authors highlight that an increase in the minimum wage can have unwanted redistributive effects, favoring workers with more skills and penalizing those with fewer opportunities.
In general, therefore, the effects of the minimum wage and its variations are much more complex than it appears at first sight and, very often, are only perceptible ex post. Then if Professor Fornero sets the salary, the problem does not arise: she wants a base salary so low as to be lower than any healthy contractual salary.
#Fornero : 9 euro minimum wage is also a bit much, better 8 or 7
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— Adriana Spappa (@AdrianaSpappa) July 5, 2023
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The article What is the impact of the minimum wage on workers' wages? The results of a Harvard research comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/quale-limpatto-del-salario-minimo-sulle-remunerazioni-dei-lavoratori-i-risultati-di-una-ricerca-di-harvard/ on Mon, 10 Jul 2023 06:00:16 +0000.