Minimum Wages and Employment Composition

Grant description:

There is a large literature exploring the tension between increasing minimum wages in order to raise the hourly wages of workers and having these increases offset by reductions in overall employment or hours worked by low-wage employees. Understanding the distributional impacts of minimum wage increases is therefore essential. This project seeks to provide some of the first empirical evidence on how minimum wage reforms change firms’ occupational composition, distribution of hours, and scheduling practices. To do this, the authors will leverage shift-level microdata for the near-universe of employees and contract workers at U.S. nursing homes from the Payroll Based Journal program. The nursing home industry is an attractive setting for this research as it is a major employer of low-wage workers, especially certified nursing assistants, who provide the majority of patient care at nursing homes, are typically paid at or just above the minimum wage, and the majority of whom are immigrants and women of color. Moreover, many low-wage staff intend to work in the industry throughout their careers, in stark contrast to more heavily studied low-wage industries such as restaurants and retail, where many workers expect to leave the industry quickly. Accordingly, wage policies in the nursing home sector have the potential to not only affect the economic well-being of low-income workers but also shape gender and racial pay divides. In addition, the nursing home industry is of particular interest to regulators and policymakers since Medicaid and Medicare finance the vast majority of long-term care, and policies that affect the wages of employees in this sector will correspondingly affect state and federal budgets. Employment or composition changes may also have important consequences for quality of care.