A Fair Wage: Workplace Wage Structures and Minimum Wage Increases

Knudson, Marcel; Knudson, Marcel

While the debates around workplace regulation are permeated with moral language, researchers have rarely looked at how fairness concerns shape the outcome of the law. Using qualitative methods, I examine how minimum wage increases in the restaurant industry were shaped by beliefs about worth and value, leading to changes that were widespread but differed from restaurant to restaurant. Following minimum wage increases in Oakland and Chicago, I conducted 80 interviews with owners, managers, and workers. In discussing management style in addition to outcomes of the law, I found that organizational differences would lead otherwise similar restaurants to diverge in their responses to the increase. In low-wage workplaces, job quality factors are understood relative to their legislated levels. When workplace laws change, employer may seek to maintain their relative position, rather than their absolute one. By looking at the symbolic value placed on wages and other forms of compensation, we can better understand how companies and workers will respond to regulations.

In this paper, I focus on spillovers—wage increases that exceed the new minimum. I examine how restaurant wage policy functions before the minimum wage increase, and find that the extent of spillovers was largely a consequence of these pre-existing company wage strategies. In workplaces where wages were understood as linked to skills and value in the labor market, spillovers were marginal. In workplaces where wages were explained through effort or experience, spillovers were more substantial. In addition, I find that employers and workers place importance on wage gaps as reaffirming distinctions between employees. Employers re-affirmed these hierarchies even at a cost to their bottom line. I draw on these findings to argue that qualitative differences explain between employers are important to understanding the pattern of effects from regulatory changes.

Association for Public Policy Analysis & Management

Panel Paper: A Fair Wage: Workplace Wage Structures and Minimum Wage Increases