Javascript must be enabled to continue!
The Politicization of Wage Setting
View through CrossRef
Political realignment in America has reshuffled party affiliations across occupational lines. Increasingly the party of unions and minimum wages is also the party of managers and professionals. In this article, we investigate whether this realignment among the actors setting wages within firms has politicized wage setting. We first show that Democrat managers pay more to hourly workers, even comparing across firms within metro-occupation-industry-year local labor markets. This premium is confined to senior managers and human resources and compensation managers; a placebo test shows that operations managers' political affiliation is uncorrelated with wage levels. We then show, consistent with coalitional behavior, that the Democrat wage premium is larger for Democrat-leaning service jobs than for increasingly Republican blue-collar workers, and larger for women than for men. Democrat managers raise pay more around salient minimum wage increases and become relatively more likely to pay $15 wages specifically. In an experiment in which manager-employee partisan match is randomly assigned, managers are 10 percentage points more likely to assign co-partisans a higher wage. Finally, we show that the Democrat wage premium has grown in recent years, and that this accounts for 12% of extra wage increases for low-wage workers during this period. Taken together, these results suggest a politicization of wage-setting, wherein managers' liberal commitments benefit frontline workers in their political coalition.
Title: The Politicization of Wage Setting
Description:
Political realignment in America has reshuffled party affiliations across occupational lines.
Increasingly the party of unions and minimum wages is also the party of managers and professionals.
In this article, we investigate whether this realignment among the actors setting wages within firms has politicized wage setting.
We first show that Democrat managers pay more to hourly workers, even comparing across firms within metro-occupation-industry-year local labor markets.
This premium is confined to senior managers and human resources and compensation managers; a placebo test shows that operations managers' political affiliation is uncorrelated with wage levels.
We then show, consistent with coalitional behavior, that the Democrat wage premium is larger for Democrat-leaning service jobs than for increasingly Republican blue-collar workers, and larger for women than for men.
Democrat managers raise pay more around salient minimum wage increases and become relatively more likely to pay $15 wages specifically.
In an experiment in which manager-employee partisan match is randomly assigned, managers are 10 percentage points more likely to assign co-partisans a higher wage.
Finally, we show that the Democrat wage premium has grown in recent years, and that this accounts for 12% of extra wage increases for low-wage workers during this period.
Taken together, these results suggest a politicization of wage-setting, wherein managers' liberal commitments benefit frontline workers in their political coalition.
Related Results
Determining the relationship between unemployment and minimum wage in Turkey
Determining the relationship between unemployment and minimum wage in Turkey
The minimum wage, which has increased more than tenfold in Turkey since 2014, has been a controversial topic for Turkish economic policy in the last few years. This controversy is ...
The Minimum Wage and Labor Market Outcomes
The Minimum Wage and Labor Market Outcomes
The introduction of a search and bargaining model to assess the welfare effects of minimum wage changes and to determine an “optimal” minimum wage.
In The Minimum Wa...
IMPLEMENTASI MAQASHID AL-SYARIAH DALAM PENETAPAN UPAH MINIMUM PEKERJA BERBASIS KEADILAN
IMPLEMENTASI MAQASHID AL-SYARIAH DALAM PENETAPAN UPAH MINIMUM PEKERJA BERBASIS KEADILAN
This research is intended to provide a solution in determining the minimum wage for workers that realizes a sense of justice based on values derived from Islamic sharia, so this re...
City Minimum Wages and Spatial Equilibrium Effects
City Minimum Wages and Spatial Equilibrium Effects
This paper studies the effect of minimum wage changes on spatial equilibriums in local labor markets. Using data for the U.S. and minimum wage variation across state borders, I ana...
پاکستان میں اجرتی نظام کے اصول اور قانونی ڈھانچہ: ایک تجزیاتی تحقیق
پاکستان میں اجرتی نظام کے اصول اور قانونی ڈھانچہ: ایک تجزیاتی تحقیق
The issue of wage determination in Pakistan is not merely an economic concern but a critical social, legal, and human rights matter shaped by state policies, judicial frameworks, i...
Analisis Determinan Tingkat Upah di Sumatera Barat
Analisis Determinan Tingkat Upah di Sumatera Barat
This study aims to determine: (1) The effect of employment status on wage levels in West Sumatra. (2) The effect of education level on wage levels in West Sumatra. (3) Effect of ge...
Predictive Insights: Using Macro and Micro Models for Wage Growth Forecast in Malaysia
Predictive Insights: Using Macro and Micro Models for Wage Growth Forecast in Malaysia
The Malaysian government has implemented the Progressive Wage Policy (PWP) to accelerate wage growth and address the low contribution of employee compensation (CE) to Gross Domesti...
Regional Wage Responsiveness to Unemployment — Rural–Urban Heterogeneity and Policy Implications
Regional Wage Responsiveness to Unemployment — Rural–Urban Heterogeneity and Policy Implications
AbstractPrevious studies of regional wage formation in Norway have indicated low regional wage responses to regional unemployment. However, previous analyses have not investigated ...

