Beyond the wage: Changes in employment and compensation patterns in response to the national minimum wage

This study examines whether the national minimum wage has changed aspects of individuals’ work arrangements, other than just their hourly wage, drawing on data from the Annual Survey of Hours and Earnings and the Labour Force Survey. In contrast to earlier U.K. studies, the analysis includes worker fixed effects, thereby controlling for all time-invariant factors that influence employment outcomes. The results indicate that the minimum wage has a negative effect on a person’s likelihood of remaining in the same job, although its effect on the probability of exiting employment altogether is modest, since many workers change firms within a year of a minimum wage rise. Among those who remain with the same employer, the minimum wage reduces hours and weeks of work. It has little effect on levels of non-basic pay, the use of temporary contracts or flexible employment arrangements or the provision of pensions. Measurement error and the shortness of the panel in the Labour Force Survey limit the ability to derive accurate estimates using these data.