Do minimum wage laws affect those who are not covered?

What is it about?

In this paper, the authors analyze the impact of minimum wage legislation on agricultural workers compared to other low-wage workers in the United States. They highlight that several exemptions apply to agricultural workers, making them less likely to be covered by minimum wage laws. The authors use data from the Current Population Survey (CPS) and supplement it with data from the National Agricultural Workers Survey (NAWS) for a case study of California. The study finds that wage increases for covered workers exceed those for uncovered workers, and there are insignificant differences in hours worked before and after minimum wage changes. This paper is the first to examine the impacts of minimum wage coverage on agricultural workers in the US. Additionally, the authors analyze the differential effects on workers in piece rate versus hourly paid positions and those who are undocumented versus documented. The authors recognize limitations in their data sources, as the CPS may not be fully representative of the US farmworker population and the NAWS excludes H-2A workers. Despite these limitations, the paper contributes to the understanding of the consequences of extending minimum wages to all US farm workers, and the results are relevant for discussions about industries with incomplete minimum wage coverage.

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Photo by Alexander Grey on Unsplash

Photo by Alexander Grey on Unsplash

Why is it important?

This paper is important as it investigates the impacts of minimum wage legislation on agricultural workers, a less-studied group that often lacks minimum wage coverage, compared to other low-wage workers in the United States. It seeks to contribute to the limited literature on minimum wages in the agricultural sector and examine the effects on wages and hours worked for workers who are not explicitly covered by the legislation. The study uses data from the Current Population Survey (CPS) and the National Agricultural Workers Survey (NAWS), enabling a cross-sector comparison and analysis of legal status and payment basis. The results suggest that wage increases for covered workers are greater than those for uncovered workers, with insignificant differences in hours worked before and after minimum wage changes. This is the first study to examine the impacts of minimum wage coverage on agricultural workers relative to workers in plausible substitute employment sectors in the U.S. The paper also extends the analysis to piece rate versus hourly paid positions in agriculture and undocumented versus documented workers, providing empirical confirmation of the differential impact of minimum wage legislation on subsets of the relevant worker population. The findings are relevant to policy discussions on minimum wage legislation, particularly for industries with incomplete coverage, such as agriculture. The results contribute to the understanding of the consequences of extending minimum wages to all U.S. farm workers and could inform policy discussions beyond agricultural markets, as exemptions to the federal minimum wage apply to various other worker categories. However, specific institutional and labor market characteristics may play important roles, and further examination of the effects of minimum wages on the extensive margin of work in agriculture versus other sectors is needed.

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