Working Paper: NBER ID: w31281
Authors: Jonathan Meer; Hedieh Tajali
Abstract: The nonprofit sector’s ability to absorb increases in labor costs differs from the private sector in a number of ways. We analyze how nonprofits are affected by changes in the minimum wage utilizing data from the Bureau of Labor Statistics and the Internal Revenue Service, linked to state minimum wages. We examine changes in reported employment and volunteering, as well as other financial statements such as revenues and expenses. The results from both datasets show a negative impact on employment for states with large statutory minimum wage increases. We observe some evidence for a reduction in the number of nonprofit establishments, fundraising expenses, and revenues from contributions.
Keywords: minimum wage; nonprofit sector; employment; labor costs
JEL Codes: H42; J3; J40; J48
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| large statutory increases in the minimum wage (J38) | decrease in employment in the nonprofit sector (L39) |
| large statutory increases in the minimum wage (J38) | reduction in the number of nonprofit establishments (L39) |
| large statutory increases in the minimum wage (J38) | reduced fundraising expenditures (H59) |
| large statutory increases in the minimum wage (J38) | lower revenues from contributions (H27) |