Does a One-Size-Fits-All Minimum Wage Cause Financial Stress for Small Businesses?

• 成果类型: Article
• 署名作者: Chava, Sudheer; Oettl, Alexander; Singh, Manpreet
• 署名单位: University System of Georgia; Georgia Institute of Technology; National Bureau of Economic Research
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2022.4620
• 发表日期: 2023
• 页码: 7095-7117
• 关键词: SMALL BUSINESS; Financial distress; Minimum wage; Credit score

摘要

Using intertemporal variation in the bounding of a state's minimum wage by the federal rate and business credit-score data for 15.2 million establishments, we find that the increase in labor costs caused by a higher federal minimum wage leads to lower business credit scores and worsens the financial health of small businesses in the affected states. In particular, small, young, labor-intensive, and minimum-wage-sensitive establishments located in affected states and those located in competitive and low-income areas experience higher financial stress. Increases in the minimum wage are associated with employment reductions and a higher exit rate for small businesses. Our results document some potential costs of a one-size-fits-all nationwide minimum wage for some small businesses.