Waiting for Change: The two tiered wage system Sylvia A. - - PowerPoint PPT Presentation

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Waiting for Change: The two tiered wage system Sylvia A. - - PowerPoint PPT Presentation

Feb 26, 2023 131 likes •341 views

Waiting for Change: The two tiered wage system Sylvia A. Allegretto, PhD Co-chair: Center on Wage & Employment Dynamics Institute for Research & Labor Employment University of California, Berkeley $8.00 Federal MW $7.25 $7.00 $6.00

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Waiting for Change: The two tiered wage system

Sylvia A. Allegretto, PhD Co-chair: Center on Wage & Employment Dynamics Institute for Research & Labor Employment University of California, Berkeley

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$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00

Tipped wage $2.13 Federal MW $7.25 Tip credit $5.12

Allegretto 2013

50% 40%

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$0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00

Customer portion of the wage bill is 71% Employer part of the wage bill is 29%

Allegretto 2013

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Allegretto 2013

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$2.13 $2.63 $3.63 $5.69 $9.19 $5.12 $5.37 $3.62 $2.56 $0 $1 $2 $3 $4 $5 $6 $7 $8 $9 $10

Federal Massachusetts Maryland Connecticut Washington State

Tip Credit Tipped Wage

$8.00 $9.19 $8.25 $7.25

Allegretto 2013

$7.25

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80% 90% 100% 110% 120% 130% 140% 150% 160% 170% 180%

Full-service restaurants Private sector

Allegretto 2013 Source: BLS QCEW data.

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0% 20% 40% 60% 80% 100% 120% 140% Private employment Limited service restaurants

Allegretto 2013 Source: QCEW 1990q1 to 2011q4.

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0% 10% 20% 30% 40% 50% 60% Under 20 20 to 29 30 to 39 40 to 49 50 or older Total workforce Tipped workers Waiters

Source: Allegretto & Filion, EPI 2011. BLS CPS data.

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51.4% 32.0% 27.6% 48.6% 68.0% 72.4%

0% 10% 20% 30% 40% 50% 60% 70% 80% All workers Tipped workers Waiters Male Female

Source: Allegretto & Filion, EPI 2011. BLS CPS data.

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$15.59 $9.87 $9.22 $17.25 $10.22 $9.87 $14.24 $9.72 $9.04

$0 $2 $4 $6 $8 $10 $12 $14 $16 $18 $20 All workers Tipped workers Waiters All Male Female

Source: Allegretto & Filion, EPI 2011. BLS CPS data.

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6.7% 16.1% 19.4% 6.0% 14.6% 16.2% 6.7% 12.1% 13.5%

0% 5% 10% 15% 20% 25% All workers Tipped workers Waiters Full Tip Credit Partial Tip Credit No Tip Credit

Source: Allegretto & Filion, EPI 2011. BLS March CPS data.

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Allegretto 2013

8.4% 15.7% 14.5% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% Private Sector Restaurant Industry Tipped workers

Source: BLS CPS data

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71% 62% 65% 37% 29% 32%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Health care Paid sick days Retirement

Private sector Acc & Food Svcs

Allegretto 2013

Source: BLS NCS data.

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 Papers on TW and/or Tip Credit Provisions:

  • Even & Macpherson. IZA DP No. 7092, 2012

▪ Pledged by unobserved heterogeneity as in MW literature.

  • Anderson & Bodvarsson. Applied Economic Letters, 2005

▪ Higher TW doesn’t boost pay; one year of data.

  • Wessels. Economic Inquiry, 1997

▪ Labor market for tipped wait staff is monopsonistic.

  • Wessels. Journal of Labor Research, 1993

▪ Uses one year of retail data to show restaurant employment & hours would decrease significantly if the TC were reduced.

 Look to recent MW studies

  • Allegretto, Dube, Reich. Industrial Relations, 2011
  • Dube, Lester, Reich. ReStat, 2010
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 QCEW: 1990-2010

  • Each observation is merged with State data

▪ Unemployment rates: capture labor market conditions ▪ Relevant shares : capture labor supply ▪ MW, TW and TC: treatment & variables of interest

Allegretto WEAI 2011

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  • Spec. 1

𝑚𝑚𝑚𝑗𝑗 = 𝛽 + 𝜸𝟐ln (𝑁𝑁

𝑡𝑗) + 𝜸𝟑ln

(𝑈𝑁

𝑡𝑗) + 𝛿ln

(𝑄𝑄𝑄𝑡𝑗) + θln (𝑄𝑄𝑄𝑡𝑗) + 𝝔𝒕 + 𝝊𝒖 + 𝜁𝑡𝑗

  • Spec. 2

𝑚𝑚𝑚𝑗𝑗 = = 𝛽 + ………… ………… + 𝝔𝒕 + 𝝊𝒆𝒖

  • Spec. 3

𝑚𝑚𝑚𝑗𝑗 = = 𝛽 + ………… ………… + 𝝔𝒕 + 𝝎𝒕 · 𝐮 + 𝝊𝒖

  • Spec. 4

𝑚𝑚𝑚𝑗𝑗 = = 𝛽 + ………… ………… + 𝝔𝒕 + 𝝎𝒕 · 𝐮 + 𝝊𝒆𝒖

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  • Spec. 1

𝑚𝑚𝑚𝑗𝑗 = 𝛽 + 𝜸𝟐ln (𝑁𝑁

𝑡𝑗) + 𝜸𝟑ln

(𝑈𝑁

𝑡𝑗) + 𝛿ln

(𝑄𝑄𝑄𝑡𝑗) + θln (𝑄𝑄𝑄𝑡𝑗) + 𝝔𝒕 + 𝝊𝒖 + 𝜁𝑡𝑗

  • Spec. 2

𝑚𝑚𝑚𝑗𝑗 = = 𝛽 + ………… ………… + 𝝔𝒕 + 𝝊𝒆𝒖

  • Spec. 3

𝑚𝑚𝑚𝑗𝑗 = = 𝛽 + ………… ………… + 𝝔𝒕 + 𝝎𝒕 · 𝐮 + 𝝊𝒖

  • Spec. 4

𝑚𝑚𝑚𝑗𝑗 = = 𝛽 + ………… ………… + 𝝔𝒕 + 𝝎𝒕 · 𝐮 + 𝝊𝒆𝒖

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Specification (1) (2) (3) (4) Earnings lnTW η 0.044** 0.037* 0.055*** 0.045** se

(0.018) (0.021) (0.014) (0.017)

lnMW η 0.152*** 0.136*** 0.136*** 0.127*** se

(0.029) (0.042) (0.030) (0.026)

Employment lnTW η

  • 0.094**
  • 0.013
  • 0.008
  • 0.012

se

(0.040) (0.042) (0.038) (0.046)

lnMW η

  • 0.114**
  • 0.027
  • 0.073**
  • 0.026

se

(0.055) (0.066) (0.034) (0.058) Division-specific time controls

Y Y

State-specific time trends

Y Y

Allegretto 2013 Source: Aggregated QCEW data 1990q1-2010q4. Note: Significance *** p<0.01, ** p<0.05, * p<0.1 Other controls: U Rates, POP, EPOP, % College Degree, personal income

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 The MW and TW

  • Can certainly be increased at federal level without

negative effects.

  • The paid wage matters to tipped workers
  • More work to look closely at states with No TC

▪ Perhaps labor-labor substitution

 Policy areas

  • Reconnect TW to MW as in H-M Bill (70%)
  • Other policies such as paid leave, address JIT, low-

to-no benefits.

Allegretto 2013