What do American cities with a ‘living wage’ have in common?

Over the past 15 years, there have been numerous local initiatives to increase the minimum wage to $15 per hour and what is known as a “living wage”.

According to the National Employment Law Project, 38 cities and/or counties have passed such laws.  Seventeen of these jurisdictions are located in California, five in New Mexico and three in Washington State.

This author has previously conducted a regression analysis looking at how the percent change in a city’s population predicted the amount of increase in the wage of these cities or counties.

The analysis is summarized in the graph below showing that for every one percent change in the population, a 17 cent increase in the minimum wage is predicted, an imperfect relationship.  Ideally, all of the blue dots representing each city’s actual wage would form a perfect straight line.

In the table below, averages for the U.S. and the localities that have enacted such laws are presented for different economic and population measures taken from the Census Bureau’s website.

These entities have experienced on average a larger population growth than the U.S. as a whole.  They also have higher poverty, uninsured and high school graduation rates and larger foreign-born populations than the U.S. as a whole.

In addition, these locales have higher median incomes and median residential values than America in-total.

 

Average Min Wage

 

Pop Change

 

Poverty

 

Median Income

 

High School

 

Uninsured

 

Median Home  Value

 

Foreign born

 

Veterans

 

Persons per Company

U.S. $7.25 4.7% 12.7% $53889 86.7% 10.1% $178600 13.2% 6.2% 11.7
Average of Cities/Counties $12.05 6.0% 16.9% $62451 87.8% 13.4% $410953 22.0% 5.0% 11.0

 

The higher poverty rates coupled with higher median household income, housing values and uninsured rates suggest a higher gap between rich and poor in these areas than the U.S. as a whole. The geographic locations of these areas also suggest a more receptive political climate for passing these ordinances.

Up next: A multiple regression analysis to see which of the above variables are the best predictors of the magnitude of the wage increase.

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