Proponents of living wage laws argue that a just society cannot in good conscience pay its workers less than is required to escape poverty. However, some economic theorists contend that establishing high wage floors will force firms to cut jobs in order to hold down their production costs. This debate prompts an empirical question: to what extent are the social benefits of living wage laws offset by adverse economic side effects?
Mark Brenner of the University of Massachusetts at Amherst will examine this question using longitudinal data from firms exposed to different mandatory minimum wages. In 2001, the city of Boston expanded upon its preexisting living wage ordinance, increasing the law’s scope and raising the wage that firms contracting with the city must pay to its employees. By augmenting data on Boston firms collected before the law’s expansion with new survey information, Brenner will create the first data set anywhere to track a group of firms over time as living wage laws were implemented and expanded. This data set will compare changes in employment volume, turnover and necessary job skills for employees at three types of firms: those affected by only the most recent wage hike, those impacted by both the increase and the original law, and those who are covered by neither.
Unlike previous research, which sought to predict the behavior of employers, Brenner’s retrospective analysis will show the actual impact of these laws on employment and wages. By revealing the true experience of firms that were forced to deal with increases in mandatory wages, this research can help communities considering such measures to understand if living wage laws are in fact an effective tool in fighting poverty.
Reports and Publications
- Brenner, Mark. 2005. "The Economic Impact of the Boston Living Wage Ordinance," Industrial Relations Vol. 44 (1): 59-83. (Gated)