Absence of conflict of interest.
Citation
Highlights
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The study's objective was to examine the impact of minimum wage increases on unemployment and labor force participation using a national data set.
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The author estimated the near-term impacts of minimum wage changes on employment, part-time status, and labor force participation outcomes for 3 ages groups using a fixed effects design with monthly longitudinal data from 1990 through 2017, a period that saw numerous state minimum wage changes.
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The study found the probability of being unemployed decreases with a minimum wage increase across all three ages groups, and the effects are significant for the 16-19 age group and 25-29 age group. The study also found that immediately following a minimum wage increase, the probability of labor force participation significantly decreases for all age groups, but there is no increase in individuals working part-time.
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The study receives a low evidence rating. This means we are not confident that the estimated effects are attributable to minimum wage increases; other factors are likely to have contributed.
Intervention Examined
Minimum Wage Increases
Features of the Study
This study examines the effects of experiencing minimum wage increases throughout a long study period. During the sample period, combining both state and federal changes, a total of 516 effective minimum wages occurred.
The author used a fixed effects design to estimate the impacts of minimum wage changes on employment and labor force participation across three age groups. The study applied a statistical model to compare employment and labor force participation over time, preceding and following a minimum wage change, using monthly longitudinal data from the 1990 to 2017. The study samples included three age groups: individuals ages 16–19, individuals ages 20–24, and individuals ages 25–29 from all 50 U.S. states plus the District of Columbia. The intervention is an increase in minimum wage during the study period. Overall, during the sample period, a total of 516 effective minimum wage increases occurred when both state and federal changes are combined. The study uses the monthly Current Population Basic Surveys (CPS) from 1990 through 2017 to collect data on individual employment and labor force status in each month, in which each individual was sampled up to 8 times. Monthly minimum wages by state were gathered from a research webpage (for 1990-2011) and state labor agencies and government websites (for 2012-2017). The individuals were clustered by state in the statistical model.
Findings
Employment
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The study finds the probability of being unemployed decreases with a minimum wage increase across all 3 ages groups, and the effects are significant for the 16-19 age group and 25-29 age group.
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The study finds no significant impact of a minimum wage increase on part-time status.
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The study finds that the probability of labor force participation decreases significantly with a minimum age increase for all age groups.
Considerations for Interpreting the Findings
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The authors compared the outcomes of participants measured before and after they experienced a minimum wage change. The CLEAR’s guidelines require that the authors must observe outcomes for multiple periods before the intervention to rule out the possibility that participants had increasing or decreasing trends in the outcomes examined before the intervention. In this study, the author used a 4-month sample frame, during which the participants experienced a minimum wage change. Nearly 70% participants were observed monthly for 4 consecutive months, and about 20% were observed for 2 or 3 months (those who were observed for one month were excluded from the analysis). This suggest that only a part of the sample was observed up to 3 times before the intervention. The author should have examined the trend before the intervention for multiple periods. Without knowing the trends before the intervention, we cannot rule out the possibility that this trend was not in place before the minimum wage increase.
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The author also noted that it is not clear to what extent employers anticipated increases in the minimum wage and might have raised wages ahead of any mandated change.
Causal Evidence Rating
The study receives a low evidence rating. This means we are not confident that the estimated effects are attributable to minimum wage increases; other factors are likely to have contributed.