Today, the Employment Policies Institute (EPI) released a new study authored by University of Kentucky economist Aaron Yelowitz, which examines the impact of citywide compensation floors in cities like San Francisco. The study finds that (all else being equal) each additional $1 increase in wage and benefit mandates reduces young adults’ labor force participation by roughly two percentage points, increases unemployment by 4.5 percentage points, and causes a 26-hour reduction in annual hours worked.
Progressive researchers have long insisted that San Francisco’s highest-in-the-nation compensation floor (including a soon-to-be $10.55 minimum wage, mandatory heath care coverage, and paid sick leave requirements) has had no negative impact on employment. However, by closely examining Census Bureau data from San Francisco and similar cities around the country, Dr. Yelowitz demonstrates that increasing compensation floors causes significant harm to the employment prospects of young adults.
The full study and executive summary are available here.