Advertisement

An Increase in the Federal Minimum Wage: Good for Employees, Bad for Stockholders?

  • Carolyne C. SoperEmail author
  • Monika Sywak
Research note

This study analyzes the abnormal returns of publicly traded employers before and after the last federal minimum wage change of July 2009. These types of policy announcements, while expected, can cause unanticipated movements in the stock market. The price/return can reflect the financial market’s perception of the company’s financial health and ability to experience profits in the future. Abnormal returns (the differences between a single stock or portfolio’s performance and the expected return over a set period) are used to determine a security’s or portfolio’s risk-adjusted performance when related to the overall market/particular index. The federal minimum wage of $7.25 went into effect on July 24, 2009. The 38 companies analyzed in this study represent both the food service industry and the apparel industry (included in the leisure and hospitality and retail trade when reported by the U.S. Bureau of Labor Statistics). There is a high saturation of minimum wage workers in these...

JEL Classification

G4 G30 J31 J38 

Notes

Copyright information

© International Atlantic Economic Society 2019

Authors and Affiliations

  1. 1.Department of EconomicsCentral Connecticut State UniversityNew BritainUSA
  2. 2.Villanova UniversityVillanovaUSA

Personalised recommendations