Employment – Page 2 – Economic Thinking In Action

Neumark Speaks to Freakonomics on the Minimum Wage

Policymakers and economists continue to debate the merits and costs of minimum wage increases. The Raise the Wage Act of 2021, if enacted, would increse the federal minimum wage from its current $7.25 an hour to $15 an hour. What are the policy implications of the proposal: would it reduce poverty, increase prices, cost jobs, raise living standards, or perhaps a combination of impacts? What is the read of the academic literature on the subject?

Professor David Neumark was featured on the popular economics podcast Freakonomics to help answer this question. Dr. Neumark is an economics professor at the University of California – Irvine, and on the show describes how the academic consensus on the minimum wage has changed over the years. The benefits and costs however, are clear to Neumark:

“So my research on the minimum wage, one of the things it tends to say is there definitely is some job loss. And I’m quite convinced of that. So on net, there are winners and there are losers. I think then the question is, how do you add those up? So one reasonable metric is to say, “Well, okay, do we reduce poverty?” If we do, then maybe the costs are acceptable relative to the benefits. My reading of the evidence is that it’s pretty hard to find convincing evidence that poverty will fall.”

You hear more from Professor Neumark on the Freakonomics Episode here.

In The News

Raising the federal minimum wage has long been a topic surrounding politics and economists for years. Since the last federally mandated minimum wage increase in 2009, efforts to continue increases have built. Professor David Neumark is featured in CNN Politics discussing the cause and effect of these efforts.

Neumark, an economics professor at the University of California Irvine, discusses the potential impact of unemployment should a federally mandated minimum wage increase be implemented. Professor Neumark notes that in some low-wage states, more than half of workers make less than the proposed $15 per hour wage. As future minimum wage increases occur, the minimum wage will affect a greater share of workers.

You can find Professor Neumark’s CNN Politics feature here.

What is the Latest on the Minimum Wage?

A paper published in the NBER in January of 2021 attempts to cast new light on minimum wage research in the United States. The working paper, co-authored by Professor David Neumark and Peter Shirley is titled “Myth or Measurement: What Does the New Minimum Wage Research Say About Minimum Wages and Job Loss in the United States?”. The paper argues that, contrary to more traditional summaries of the literature, there is a clear evidence of the negative impacts of minimum wages on employment.

Concentrating on research evidence from within the United States since the early 1990s, Neumark and Shirley assembled all the available papers and literature published in the 30 years on the topic. Neumark and Shirley identified the core estimates and the key takeaways from the authors and researchers on each study. After assembling all of the literature, they find that almost 80% of studies in the literature suggest negative employment effects from raising the minimum wage.

There were several other takeaways from Neumark’s research. For instance, the evidence that the minimum wage had strong, negative employment effects was far more robust for certain populations, such as teens, young adults, and the less educated. At the same time, while studies of low wage industries broadly show negative employment effects, the research is not as decisively one sided.

The evidence is not unambiguous, with some research in specific categories (such low-skilled workers) showing net zero or even positive effects from raising the minimum wage. But, as the paper shows clearly that most of the evidence indicates that “minimum wages reduce low-skilled employment.” And that “It is incumbent on anyone arguing that research supports the
opposite conclusion to explain why most of the studies are wrong.”

See here for Neumark & Shirley working paper.

When Does Age Discrimination Begin?

An article published by Forbes in January 2020, discusses age discrimination in the workplace, specifically during the hiring process. The article written by Patricia Barnes highlights the working paper by Professor David Neumark titled “Age Discrimination in Hiring: Evidence from Age-Bling vs. Non-Age-Blind Hiring Procedures”. Both the article and paper indicate that discrimination begins to occur at the time age becomes apparent to the employer. This can be at different times and are often specific to each employer’s practices and hiring procedures.

One of the key findings of Neumark’s research is that individuals that apply for a job position in-person are substantially less likely to continue on in the hiring process than those individuals that apply for a job position on the Internet. While other indicators of age, such as dates of education and employment, may lead to discrimination through Internet applications, they are less obvious and less accurate indicators of age.

In Neumark’s study and working paper, an individual turning in an application for a restaurant in-person was about 50% more likely to not receive a job offer than someone who did not apply in person, but received an interview. Potential discrimination existed throughout the hiring process depending on the time the employer was made aware of an applicant’s age.

When calculating damages in discrimination lawsuits specifically claiming failure to hire, it is important to understand the timeline and when during hiring potential discrimination might have taken place. It is likely necessary to investigate multiple steps in the hiring process to reveal or refute discriminatory hiring practices, as outlined by Neumark’s paper.

See here for Professor Neumark’s full working paper.

The Economist feature article “Who pays?”

David Neumark of the University of California, Irvine, and EmployStats academic affiliate, has been featured in the finance and economics section of The Economist’s 2020 edition. The article focuses on the topic of wage floors and the cause and effect of increasing minimum wage requirements. A minimum wage policy raises wages for workers, but the money required to support higher minimum wages has a potential to hit poorer bosses’ harder.

Professor Neumark’s paper, co-authored by Lev Drucker and Katya Mazirov, referenced in The Economist article, examines the potential effect increasing the minimum wage may have on businesses. The author’s paper titled “Who Pays for and Who Benefits from Minimum Wage Increases? Evidence from Israeli Tax Data on Business Owners and Workers” offers insight into potential unintended consequences of increased wage floors.

The Economist article can be found here.

Drucker, Mazirov, and Neumark’s paper can be found here.

Economics and Statistics Experts in Wage and Hour Litigation

Complex wage and hour litigation often involves significant data management and sophisticated analyses in order to assess potential liability and damages. This article highlights common wage and hour data management issues, sampling and surveying, as well as provides a case study as an example of the use of sampling in an overtime misclassification case.

Download Dr. Dwight Steward and Matt Rigling’s paper on wage and hour expert economists here!

Economics and Statistics Experts in Wage and Hour Litigation

Back Pay and Front Pay Calculations in Employment Termination Cases

Most plaintiffs in employment termination cases will ultimately become re-employed. This article discusses the factors that comprise a standard economic damage model in an employment termination case.

Download Dr. Dwight Steward’s paper on Back Pay and Front Pay Calculations in Employment Termination Cases here!

Back Pay and Front Pay Calculations in Employment Termination Cases

Case Update: Mileage Reimbursement

The scope of Wage and Hour cases can extend beyond traditional claims on overtime or off-the-clock work. The same analytical principles can extend, for example, to cases involving employee reimbursements. EmployStats has recently worked on a case in California where the Plaintiffs allege they were not reimbursed for routine miles traveled in personal vehicles between job sites, despite the Defendant’s stated policy.

The EmployStats team assessed the Plantiffs’ theory of liability and estimated unreimbursed expenses based off of the available case data on mileage, parking, and toll charges. The analysis presented to the court showed a significant difference between stated and actual reimbursements for miles traveled by the Plantiffs. Based off of the analysis and other evidence at trial, the court certified the Plaintiff class.

The EmployStats Wage and Hour Consulting team’s trial plan is as follows:

First, the EmployStats team would survey a statistically representative sample of class members about the existence of unreimbursed miles, using a random sampling methodology to eliminate potential bias.
Next, the team would use a similar statistical sampling methodology to determine the typical miles traveled by the class members, and combining this resulting data with mapping platforms (ex. Google Maps API) to calculate distances in miles traveled between job locations.
Finally, Employstats would tabulate damages based off of these results, using publicly available data on reimbursement rates for miles traveled in personal vehicles.

A copy of the court’s order can be found though the link here: McLeod v Bank of America Court Order – Dwight Steward PhD Statistical Sampling Plan

To see how EmployStats can assist you with similar employment or statistics cases, please visit www.EmployStats.com or give us a call at 512-476-3711. Follow our blog and find us on social media! @employstatsnews

EmployStats at the Upcoming NELA Spring Seminar

EmployStats is honored to be attending and speaking at the upcoming National Employment Lawyers Association (NELA) Spring Seminar. The seminar, titled Epic Advocacy: Protecting Wages in Litigation & Arbitration will take place in Denver, CO on April 12-13, 2019.

EmployStats’ principal economist Dwight Steward, Ph.D., and Matt Rigling, MA, will be presenting alongside attorneys Michael A. Hodgson and Dan Getman. The speaker’s session, Calculating Damages: Views from an Expert and Lawyers, will discuss all relevant aspects of calculating and proving liability and damages in wage and hour cases.

The panelists will present the options attorneys face when attempting to tabulate damages, discuss the best practices for obtaining and analyzing data, as well as discuss common wage and hour issues such as sampling and surveys. EmployStats’ statistical experts will also provide statistical background as they relate to labor and employment class action lawsuits, such as a explaining statistical significance, confidence intervals, stratified sampling, and margin of error.

We hope to see you at the upcoming NELA Spring Seminar in Denver on April 13, we would love to meet and discuss how EmployStats can assist you with your wage and hour lawsuit. To find out more about the seminar, please visit the NELA Website. For more on EmployStats, visit the EmployStats Website.

Case Update: Employee Misclassification

The EmployStats consulting team, lead by Matt Rigling, MA, recently worked on a case involving employee misclassification. EmployStats assisted attorneys by calculating potential damages for employees who were classified as exempt but potentially should have been classified as non-exempt and therefore owed FLSA overtime wages for hours worked over 40 in a workweek.

Matt Rigling and the EmployStats team also worked to use the case data and information provided to confirm whether the employees in question passed both the salary and duties tests for exemption purposes. According to the FLSA, an employee can be classified as exempt under the Administrative, Executive, or Professional exemption if they meet all of the requirements for salary and job duties.

In this case, EmployStats compared the employee information to the salary and job duty requirements of the Administrative and Executive exemptions. Under both exemptions, the employee must be paid a salary of at least $455, as well as meet the job duties specific to an Administrative or Executive employee. According to U.S. Department of Labor, Administrative employee’s primary job duty must be office work that is “directly related to the management or general business operations of the employer or employer’s customers” and must include “the exercise of discretion and independent judgement” for matters of importance. Similarly, Executive employee’s primary job duty has to be managing the company, or a department of the company. Additionally, they must also regularly direct at least two other full-time employees and have the authority to at least recommend the company fire, hire, or promote other employees.

To see how EmployStats can assist you with an employee misclassification case or another labor and employment matter, please visit www.EmployStats.com or give us a call at 512-476-3711. Also make sure to follow our blog and find us on social media! @employstatsnews