David Neumark

Chancellor's Professor of Economics

University of California, Irvine

DAVID NEUMARK is Chancellor’s Professor of Economics at the University of California, Irvine, where he directs the Economic Self-Sufficiency Policy Research Institute (ESSPRI). He does research in numerous areas of labor economics that intersect with important public policy issues, most significantly with respect to anti-poverty policy, discrimination, and local economic development incentives. Professor Neumark was one of the original contributors to the “new minimum wage research,” helping to pioneer the use of state-level minimum wage variation to estimate minimum wage effects. His subsequent work moved well beyond the debate over employment effects, to study the effects of minimum wages on the income distribution, long-run effects of minimum wages on human capital and earnings, and complementarities between minimum wages and the Earned Income Tax Credit. In related work, he was the first to assemble data and explore methods to study the effects of city living wage laws, as well as contributing to understanding the political economy of these laws. His current work on anti-poverty policies focuses on comparisons between the minimum wage and alternative policies, with a particular emphasis on the long-term effects of these policies in encouraging economic self-sufficiency. Professor Neumark received his Ph.D. from Harvard University in 1987. He has held prior positions at the Public Policy Institute of California, Michigan State University, the University of Pennsylvania, and the Federal Reserve Board. He is currently also a Visiting Scholar at the Federal Reserve Bank of San Francisco.

He has written or edited five books, include his award-winning book Minimum Wages, published by the MIT Press in 2008, and he has published over 175 papers. He has also written many op-eds, which have appeared in the Wall Street Journal, Los Angeles Times, San Francisco Chronicle, and San Diego Union-Tribune, and has appeared frequently on National Public Radio and other national and local news outlets.


The Higher Wages Tax Credit

In this chapter, author David Neumark proposes a Higher Wages Tax Credit (HWTC) to partially offset the costs imposed by minimum wage increases on firms that employ low-skilled labor. Following a minimum wage increase, the HWTC would provide a tax credit of 50% of the difference between the prior minimum wage and the new minimum wage, for each hour of labor employed; the credit would phase out at wages higher than the minimum wage, and as wage inflation erodes the real cost of higher nominal minimum wages.