How Minimum Wages Work: Activism, Organizational Responses, and Worker Outcomes

Session Submission Type: Panel

Abstract

Wages at the bottom of the U.S. distribution are rising. Since the mid-2010s, states and localities have raised minimum wages well above the stagnant federal level of $7.25, and major corporations have voluntarily adopted company-wide wage floors above what the law requires. For the first time in forty years, wage growth at the bottom has overtaken wage growth at the top. What is happening?

Minimum wage policy is among the most debated tools in the American policy arsenal, yet fundamental questions about how it works remain unresolved. This panel takes stock of a new era in minimum wage policy, tracing the full arc from the political movements that produce higher wages, through the organizational adjustments firms make in response, to the downstream consequences for worker health and safety.

The panel tells a three-part story, from policy reform to firm-level implementation to worker impact. It begins by tracing the origins of minimum wage increases. Studying the Fight for $15 movement across dozens of American cities, Wilmers traces the causal chain from labor organizing to wage growth at the bottom, finding that the mechanism runs through legislation rather than normative shifts. Political organizing, translated into statutory policy, is the operative mechanism through which wage gains were realized.

The second part picks up where Wilmers leaves off, examining how firms respond once wages rise. Jackson, Schneider, and Harknett compare organizational adjustment across state minimum wage hikes and corporate wage pledges. Along most observable dimensions (hours, scheduling stability, benefits provision) firms absorb the increase without adverse adjustment. However, corporate programs are associated with increases in speed-monitoring technology, a channel of work intensification specific to the voluntary regime. Higher wages arrive through both channels, but the conditions under which workers earn them differ.

The third part evaluates whether the higher wages are worth those conditions. Davies, Park, and Stansbury draw on over 13 million workers' compensation claims in California to show that a 10% minimum wage increase raises injury rates by 7.2% among fully exposed workers, spanning acute accidents and cumulative physical strain. A back-of-the-envelope calculation suggests this injury risk offsets approximately 19% of the wage gain. Standard evaluations of minimum wage policy do not capture this tradeoff.

Each paper centrally engages with variation across states and localities in minimum wage laws, as a mechanism through which labor organizing raises wages and as a source of natural experimental variation, making the panel a fitting contribution to a conference focused on state policy variation and its impacts. Across the papers, difference-in-differences methods take distinct forms: local projections difference-in-differences to trace the dynamic effects of labor campaigns, stacked difference-in-differences to compare adjustment across statutory and corporate wage events, and a two-dimensional design combining geographic and occupational variation to isolate effects on workplace injuries. In an era of state and local policy ambition, these papers offer the rigorous accounting that ambition demands. Taken together, the panel asks not simply whether minimum wages work, but how they work, through which institutions, and at what cost.

Policy Area

• Employment and Training Programs

Chair

• Daniel Schneider, Harvard University

Discussants

• David Weil, Brandeis University

• Krista Ruffini, Georgetown University

Organizer

• Henri John Jackson, Harvard University

Individual Presentations

• Does Labor Activism Raise Wages? - Presenting Author: Nathan Wilmers

• Wage Policy or Pledge: Firm Adjustment Across Statutory and Corporate Wage-Setting Regimes - Presenting Author: Henri John Jackson, Harvard University

• Minimum Wages and Workplace Injuries - Presenting Author: Anna Stansbury, Massachusetts Institute of Technology

• The Tipped Minimum Wage - Presenting Author: Ishaana Talesara, Texas A&M University