The Rising Minimum Wage and Its Effect on Agricultural Workers

The Economic Research Service (ERS) of the United States Department of Agriculture (USDA) invited Ivan Kandilov to present a new paper (joint with Amy Kandilov, RTI International) entitled “The Impact of the Minimum Wage on Employment, Earnings, Wages and Hours in the U.S. Agricultural Sector” on Dec. 21, 2017 in Washington D.C.  The paper estimates the impact of the minimum wage on agricultural employment, hours, and wages by drawing on novel theories of dynamic adjustment (i.e. delayed effects of the minimum wage on employment) and using confidential data on agricultural workers. Robust evidence shows that the minimum wage has a positive contemporaneous impact on the average wage in the U.S. agricultural sector and a negative delayed impact on employment. A number of ERS branch chiefs (e.g. Markets and Trade and Rural Economy branches) were in attendance.  This topic is important given a wave of state minimum wage hikes in the last few years (e.g. California, Washington) as well as higher new minimum wages scheduled to take effect on January 1, 2018 across many states (e.g. Michigan).  The paper shows that there may be unintended consequences of higher minimum wages on long-term employment in the U.S. agricultural sector.  The article can be found here.