Minimum Wages and Typical Low Wage Households

In this paper, I estimate the impact of minimum wage increases on the hourly wages of three typical low wage households in cities that saw substantial increases in the minimum wage between 2009 and 2019, compared to cities where there was no minimum wage increase and compared to non-low wage workers. I construct a model to estimate the impact of increases in the minimum wage across five Metropolitan Statistical Areas (MSAs) in the United States. Houston, Texas and Atlanta, Georgia where the current minimum wage rate remains at the federal rate of $7.25 per hour are used as control cities, to which trends in New York City, San Francisco, Washington, D.C., Chicago, and Boston are compared. Each of the “treatment” cities passed ordinances that increased the minimum wage by at least 50 percent over the same period. Three typical low wage households are defined from occupations including cooks and food preparation workers, food and beverage serving workers, construction trades workers, production, transportation, and material moving workers, nursing, psychiatric, and home health aides, home care aides and other personal care and service workers, building cleaning and pest control workers, and information and records clerks. Using the Uniform Extracts of the Current Population Survey Outgoing Rotation Files available from the Centre for Economic Policy Research (CEPR), I implement difference-in-difference-in-differences event study methods to estimate the causal effect of minimum wage increases on the hourly wages of low wage households. I find positive wage effects across all MSAs of interest, except for D.C., with varying magnitude and significance across the three typical low wage households