These days, wages in the United States are doing something extraordinary: They’re growing faster at the bottom than at the top. In fact, recent growth for workers with low wages has outpaced that for high-wage workers by the widest margin in at least 20 years.
These state and local actions are affecting wage data, especially for workers at the bottom. To get a sense of this impact, I have used data in the Current Population Survey to look at minimum wage workers as a group and calculate the pressure their wage gains have put on aggregate wage growth over time, controlling for compositional changes in the share of minimum wage work.
But increases to minimum wages at the state and local level have put 0.4 percentage points of upward pressure on this recent growth. Absent that pressure, wage growth in the Current Population Survey over the last two years would have been 3.5%. That’s still a fine result, but it’s a bit cooler than the unadjusted data suggest.
But absent the pressure from minimum wage workers, growth at the bottom would have been closer to 3.3%. The Federal Reserve chair, Jerome Powell, has argued that reaching workers traditionally “left behind” is one of the most compelling reasons to sustain the expansion for as long as possible.
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