Aaron Yelowitz discussed the likely labor-market implications of the Kentucky Supreme Court's ruling that Louisville Metro lacked authority to establish a local minimum wage above the statewide rate. Although Lexington was not a party to the case, the ruling's reasoning effectively foreclosed Lexington's separate local minimum-wage ordinance.
Participants
- Sam Dick: Anchor and interviewer
- Aaron Yelowitz: Associate Professor of Economics, University of Kentucky; scholar, Cato Institute
Legal and policy context
On October 20, 2016, the Kentucky Supreme Court issued its decision in Kentucky Restaurant Association, Kentucky Retail Federation, and Packaging Unlimited, LLC v. Louisville/Jefferson County Metro Government, No. 2015-SC-000371-TG, 501 S.W.3d 425 (Ky. 2016). The court held that Louisville Metro's minimum-wage ordinance conflicted with Kentucky's statutory wage scheme and was invalid. Although Lexington was not a party to the case, the ruling also foreclosed its local ordinance.
Related research
- Kenneth R. Troske and Aaron Yelowitz, “The Minimum Wage and Kentucky's Working Poor: Low Hours or Low Wages?” Kentucky Annual Economic Report, 2007, 35–44.
- Aaron Yelowitz, “How Did the $8.50 Citywide Minimum Wage Affect the Santa Fe Labor Market? A Comprehensive Examination,” Employment Policies Institute, December 2005.
- Aaron Yelowitz, “The Labor Market Effects of Citywide Compensation Floors: Evidence from San Francisco and Other ‘Superstar’ Cities,” Employment Policies Institute, October 2012.
Transcript
00:00:00 — Sam Dick: To help us break down the news, we're joined by Aaron Yelowitz. He is an associate professor in the University of Kentucky Department of Economics. He received his Ph.D. from the Massachusetts Institute of Technology, and he is a scholar with the Cato Institute. Some pretty incredible background there. Thank you for jumping in here tonight. It's raining outside, and we appreciate your coming in on short notice.
Aaron Yelowitz: Oh, thanks.
Sam Dick: We asked you to crunch the numbers for us. How many workers in Louisville and Lexington earn less than $10.10 an hour? Do we know that?
00:00:27 — Aaron Yelowitz: In Lexington, it's around 81,000 workers who earn under $10.10 an hour—somewhere between $7.25 and $10.10. In Louisville, the number is more like 142,000. In both metro areas, it's a substantial part of the entire labor force. In Lexington, about 250,000 people are working. In Louisville, it's about 615,000 for the whole metro area.
00:00:49 — Sam Dick: How many of those workers actually live in the cities that we're talking about?
00:00:54 — Aaron Yelowitz: Around 70 percent of them live in the cities, which is important because there often are arguments about where the money ultimately will be spent. Obviously, people commute from outside Fayette County into Fayette County. In Louisville, people commute from Indiana as well as from the surrounding counties.
00:01:13 — Sam Dick: What would have been the impact of a $10.10 minimum wage—saying that you've got to pay people this amount of money?
00:01:20 — Aaron Yelowitz: It would have two effects. First, for workers who keep their jobs, it would raise wages by about $3,000 per year in the Bluegrass for workers in those cities. It does come at a cost, however. When you raise the price of labor, employers often will shed jobs. If you go to a store, for example, you may see a kiosk instead of a cashier. My estimates would suggest that perhaps 2,400 jobs would be lost in Lexington and about 3,900 in Louisville.
00:01:50 — Sam Dick: Any guess as to what happens now, Aaron? Given that the Kentucky Supreme Court has made its decision, where do you think we go from here?
00:01:57 — Aaron Yelowitz: What I would bet is that we'd wait for the federal government to do something. After November 8, we'll know what direction the country is going in. I wouldn't be surprised if the minimum wage goes up to $10.10 or even perhaps $12 per hour. What I would suspect is that lawmakers here might wait and see what the federal government does.
00:02:15 — Sam Dick: Of course, we don't know about employers that have already raised their minimum wage. They could keep it there, or some could say, “I'm going to take it back to the federal level.” We don't really know how many are going to do that, right? That's anyone's guess.
00:02:28 — Aaron Yelowitz: It would probably be morale-draining to lower wages. But you might imagine that, for new hires, one would bring them in at the lower $7.25 and then allow them perhaps to ratchet up as they gain experience.
00:02:39 — Sam Dick: Real quickly—20 seconds. Were you surprised by what happened today with the U.S. Supreme Court?
00:02:43 — Aaron Yelowitz: I'm too old to be surprised.
00:02:44 — Sam Dick: The Kentucky Supreme Court, excuse me.
00:02:45 — Aaron Yelowitz: I'm too old to be surprised by anything. But I testified in Louisville back when they were talking about this in 2014, and I thought that the city would be able to do that. In other places where I've talked about this, cities have been able to do it. So I was a bit surprised, I suppose.
00:03:00 — Sam Dick: Aaron Yelowitz, thank you very much, from the University of Kentucky. Thanks so much. We appreciate it, Aaron. You can join the conversation by leaving your comments on WKYT.com or on our Facebook page. Let us know what you think.