Impacts of Minimum Wage Increases in the US Retail Sector: Full-Time versus Part-Time Employment

Abstract

State and federal minimum wage hikes are likely to impact the retail industry employing a great number of less well-compensated part-time workers. Despite the relevance of this issue, it is not clear how minimum wage increases affect full-time and part-time retail employees differentially. In this study, using state-level monthly data from the Current Population Survey (CPS), we find that minimum wage hikes lead to rising part-time wages, but not to declining part-time employment. Instead, retailers reduce their full-time employment and hours of full-time workers in order to stay within a labor budget and keep serving their customers.