Berkeley Study Suggests Increasing Minimum Wage Has Positive Effects

Berkeley, CA (WorkersCompensation.com) – A new study by The University of California at Berkeley economists Anna Godoey and Michael Reich shows that doubling the minimum wage to $15 an hour would have a positive impact in many areas. The study was done in response to the Raise the Wage Act of 2019 (HR 582) which intends to gradually raise the minimum wage to $15 an hour by 2024.

Data from the American Community Survey (ACS) was used for the study. A total of 51 minimum wage events in 750 counties in 2004 and 2016 were reviewed. In addition to hourly pay, were employment status, hours worked, as well as education levels.

Although many wage studies have been done over the years, the new Berkeley study could be considered more precise as it takes into account county data instead of the previously used state level data. In addition, the study focused on the areas with the largest percentage of minimum wage workers. Furthermore, previous studies only analyzed data for wages as high as $13 an hour.

The researchers reviewed the gap between minimum wage and the median wage. Alabama is one of the lowest wage states with a high percentage of minimum wage workers. For every dollar earned by a median wage worker, a minimum wage worker will only earn 45 cents. If the wages doubled, the minimum wage rate earned would raise to 77 cents. Because of the decrease in the wage gap, the income inequality would shrink as well.

The study found a reduction in poverty, no reduction in the number of jobs, and no adverse effects on minorities.

“The results of our research show that we can raise pay to $15, even in low-cost states,” Godoey said. “The data show that the minimum wage has positive effects, especially in areas where the highest proportion of workers received minimum wage increases.”

You can find the full study on the University of California at Berkeley  website.

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