Department of Economics

Employment Effects of the 2009 Minimum Wage Increase: Evidence from State Comparisons of At-Risk Workers

Department of Economics
University of Delaware
Working Paper #2010-07

Employment Effects of the 2009 Minimum Wage Increase: Evidence from State Comparisons of At-Risk Workers

Saul D. Hoffman and Chenglong Ke

ABSTRACT

In July, 2009, the U.S. Federal minimum wage was increased from $6.55 to $7.25. Individuals in some states were unaffected by this increase, since the state minimum wage already exceeded $7.25 and the state minimum was not increased further. We use this variation, as well as variation in the actual amount of the increase, to make comparisons of the employment of “at-risk” workers across states with their peers and within states with workers arguably unaffected by the increase. Our data come from the 2009 CPS, four and five months before and after the increase. We find some evidence that the employment of some at-risk demographic groups declined as a result of the minimum wage increase, but the impacts are not statistically significant. We also find that the employment changes were not responsive to the actual amount of the increase.

JEL Codes: J08, J21

Keywords: minimum wage

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