Raising Lower-Level Wages: When and Why It Makes Economic Sense

Tomas Hellebrandt (), Michael Jarand (), Jacob Kirkegaard, Tyler Moran (), Adam Posen, Justin Wolfers and Jan Zilinsky
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Tomas Hellebrandt: Peterson Institute for International Economics
Michael Jarand: Peterson Institute for International Economics
Tyler Moran: Peterson Institute for International Economics

No PIIEB15-2 in PIIE Briefings from Peterson Institute for International Economics

Abstract: As the United States emerges from the Great Recession, concern is rising over the issues of income inequality, stagnation of wages, and especially the struggles of lower-skilled workers at the bottom end of the wage scale. A number of major American employers—for example, Aetna and Walmart—have begun to voluntarily raise the pay of their own lowest-paid employees. In this collection of essays, economists from the Peterson Institute for International Economics analyze the potential benefits and costs of widespread wage increases for lower-skilled workers, if adopted by a relevant share of US private employers. The PIIE fellows conclude that raising the pay of many of the lowest-paid US private-sector workers would not only reduce income inequality but also boost overall productivity growth, with likely minimal effect on employment in the current financial context.

Date: Written 2015-04
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Persistent link: https://EconPapers.repec.org/RePEc:iie:piiebs:piieb15-2

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