Boca Raton, FL – NCCI recently released a new Insights article that examines changes to minimum wage levels and the potential impacts on workers compensation (WC) stakeholders and NCCI ratemaking, noting that some states have implemented minimum wage increases, and there has been discussion about increasing the federal minimum wage.
Impact on Workers
Workers earning between the current minimum wage and an increased minimum wage would receive an increase in their hourly pay rate. Workers earning just above the new minimum wage may also see an increase in their pay rate, as determined by their employer and not otherwise required by law, as some employers may seek to maintain pay-equity amongst their employees.
Injured workers earning at or near the minimum wage would receive greater WC wage-replacement (indemnity) benefits after a work-related injury than they would have before a minimum wage increase. However, many states have minimum weekly benefit provisions that may mitigate an increase in benefits from a minimum wage change.
The employment effect after a minimum wage increase is unclear, however. One overview of minimum wage changes around the United States showed no adverse employment effects1, but another recent paper2 found significant negative employment effects in Seattle, WA, after a large minimum wage increase. Most evidence shows that the magnitude of any reduced employment or reduction in hours worked is smaller than the increase in wages, but the magnitude of the employment impact may depend on the magnitude of the minimum wage increase.
Read the full piece here: NCCI Insights: Minimum Wage Impacts on Workers’ Compensation
1Jardim, Ekaterina, et al. “Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence From Seattle.” No. w23532. National Bureau of Economic Research, 2017.
2Dube, Arindrajit, T. William Lester, and Michael Reich. “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties.” The Review of Economics and Statistics, 92.4 (2010): 945–964