Minimum Wage Increases and Early Labor Market Outcomes among Youth from Low-Income Backgrounds: Evidence from Seattle

• In Event: Poverty, Policies, and Program Participation's Relationship to Child and Adolescent Well-being

Abstract

Young workers from low-income backgrounds often face a higher risk of unemployment and limited access to stable employment opportunities during the transition into adulthood. Although minimum wage policy has been widely debated as a tool for improving labor market outcomes among vulnerable workers, relatively little is known about how city-level minimum wage increases affect disadvantaged youth. This study examines whether minimum wage increases shape early labor market experiences among youth from low-income backgrounds. Using the Washington Merged Longitudinal Administrative Data (WMLAD), the study employs quasi-experimental event-study and difference-in-differences designs to examine labor market entry, employment outcomes at entry, and post-entry trajectories in employment retention, hours worked, and earnings. We also compare effects with those observed among youth without low-income histories. The findings suggest that the policy did not substantially alter labor market entry, although entry rates increased modestly following the policy. At entry, earnings rose among youth from low-income backgrounds while hours changed little. During the post-entry period, employment retention and hours declined, but earnings remained higher. Overall, the results suggest that minimum wage increases can raise earnings for economically disadvantaged youth without substantially reducing labor market entry, while potentially creating trade-offs between earnings gains and employment stability.

Author

• Hanna Cho, University of Washington
  Presenting Author