‘Losing My Raise’: minimum wage increases, status loss and job satisfaction among low-wage employees

Abstract

Policymakers concerned with economic inequality regularly advocate for laws to increase the minimum wage. The impact of such laws on low-wage employment levels has been studied extensively within the field of labor economics. Yet, the vast majority of this literature has failed to explore how changes in the minimum wage impact the actual experience of low-wage work. We first discuss qualitative evidence that Walmart, the largest low-wage employer in the country, adjusts to minimum wage increases by compressing wages at the lower end of its wage distribution. We then make use of an innovative source of data to explore quantitatively the impact of such compression on workers’ experiences of their jobs at Walmart. Using a difference-in-difference approach, we find that a higher minimum wage raises job satisfaction for workers who have worked at the company for under a year, but decreases job satisfaction for longer-term and marginally higher status employees.

On the application of the Two-Factor Theory to online employer reviews

“…In previous research of employee satisfaction, online employer reviews have been utilized to study the factors that influence it. For example, existing research focused on the positive effect of family led businesses (Huang et al 2015) or of demographically diverse leader boards (Creek et al 2019) on employee satisfaction, or how state-level minimum wages positively affected satisfaction of beginners, but negatively affected satisfaction of seniors (Storer and Reich 2021). Other studies exploiting employer reviews also focused on similarly concrete problems, for example, employee satisfaction among IT workers (Moro et al 2020) or within the tourism and hospitality industry (Stamolampros et al 2019).…”

Serving Like an Organization: How Foodservice and Retail Workers Interpret Their Interactions With Customers

“…However, one can assume that workers who find the site are either curious about others reviews of their current employer, or curious about the reviews of other employers, and must fill out a review in order to browse other reviews. Glassdoor data is becoming an increasingly valuable source in academic research and has been used to study various aspects of organizational culture (Corritore et al, 2020; Storer & Reich, 2019).…”

Online Employer Reviews as a Data Source: A Systematic Literature Review

“…Finally, one study estimated employee satisfaction based on policies in a Difference-in-Differences setting [44]. In detail, a state-level minimum wage increase positively affected newly hired employees' satisfaction, but negatively affected the satisfaction of senior and high-ranking (i.e., department managers) employees [44].…”

“…Fourth, two studies extracted individual word frequencies per employer review and determined their relevance by correlating them with a secondary variable. Accordingly, Storer and Reich identified the words in their employer reviews' pros and cons section that become more common after a minimum wage increase [44]. Further, Moro et al extracted the ten most frequent nouns in their employer reviews' pros, cons, and management advice section and examined their relevance for reviews' overall ratings using a SVM model [30].…”

“…However, the authors give no further insight into the information provided via Kununu's reviews other than that they comprise a title, a text as well as a rating. [6], a survey of firms headquartered in the US and Ireland [32], and state-level information on minimum wage increase [44].…”