Poster Paper:
The Fair Labor Standards Act and the Equal Opportunity Employment Commission: Do Firms Discriminate More When Minimum Wages Increase?
*Names in bold indicate Presenter
The expansion of minimum wage laws to more states and higher pay levels raises the earnings potential for workers at the lower end of the income distribution. Economic theory, however, also predicts that those same higher wage floors lead to increased employment discrimination. With a larger applicant pool chasing fewer job openings, firms have greater ability to indulge their prejudicial tastes.
This paper uses data from the federal Equal Employment Opportunity Commission (data not publicly available but provided in response to a request from the author) tracking millions of discrimination allegations from 2006 to 2016, a period of unprecedented growth and variation in state minimum wage rates.
Higher minimum wage laws lead to a significant increase in allegations on the basis of race, color, and sex (preliminary results). But the rate of age-related filings does not rise, which is consistent with human capital theory, because the aggrieved parties (those at least 40 years old) generally have accumulated more job experience and, therefore, are less likely to be affected at the low end of the wage distribution. The paper also shows that, consistent with theory, higher minimum wages are associated with more hiring, firing, and pay discrimination claims, but no significant change in issues like harassment and the provision of reasonable accommodations for disabilities.
