The Minimum Wage and Unionization Rates of Low-Wage Workers

Abstract

This paper examines how the minimum wage impacts the incentive to unionize for low-wage workers. I suggest a mechanism whereby increases in the minimum wage effectively crowd out unions, as low-wage workers do not need to collectively bargain for higher wages if the government simply mandates that firms must pay more to each worker. Using data from the Current Population Survey (CPS), I estimate that a $1 increase in the minimum wage will decrease unionization rates by .7 percentage points within low-wage occupations. These estimates are robust to controls for spurious time trends.