Dr. John Anderson
, Baird Family professor of economics at the UNL College of Business Administration, was recently featured in an article in the Wall Street Journal
for a paper he published in Applied Economics Letters
. The article examined whether government wage mandates for tipped employees, such as waiters and waitresses, actually resulted in more take home pay for employees.
Anderson is a public finance economist who generally focuses on issues such as tax policy, but for the 2005 research cited in the Wall Street Journal, Anderson worked with labor economist Dr. Orn Bodvarrsson, of St. Cloud State University.
The article examines the fact that tipped employees can legally be paid less than the minimum wage as long as their tipped income brings their hourly wage up to the current minimum wage of $7.25. Therefore, the question becomes if their base pay is raised, will it make any difference in their total take home pay.
“The short answer to whether tipped employees earn more through government regulations to increase their salaries is, ‘no,’” Anderson said. “It’s not really beneficial to raise the minimum wage on tipped workers and doesn’t have the type of benefit you might expect on the overall take home pay.”
Anderson noted that employers receive a tip credit for the difference between the lower tipped minimum wage and the standard minimum wage which is used to make up the difference in the two amounts.
“Since states have varying levels of their tipped minimum wage we tried to take advantage of that variation across the states to see whether it had any impact on the overall level of pay and it didn’t. So our research shows that increasing that wage doesn’t increase the overall pay that workers take home,” Anderson said.
Anderson and Bodvarrsson followed up the 2005 publication with another article on tax evasion among tipped employees, looking at the level of unreported income received from cash tips.
“It’s commonly known among wait staff that evasion happens because you get a lot of your income from cash tips which you can choose to report or not. We looked at tax evasion patterns among tipped workers.”
This summer Anderson is presenting research is his usual research streams. One study relates to how Chinese cities are financed, especially with regard to their land lease revenue, and the other study tries to make sense out of the growing number of U.S. state tax rankings available.
Anderson presented a paper in May at a conference, Land Policy and Economic Development in China in Cambridge, Mass. The title of his paper was, “Chinese Municipality Land Leasing , Economic Development and the Sustainability of Public Finance,” which looked at Chinese financing in urban areas.
“I’m fascinated with these issues of how in a communist country where the government owns all the land, how they develop what looks like thriving real estate markets. If you visit any of the major cities, their real estate markets are booming. So the question is, ‘How does this happen?’”
Anderson has discovered that the primary mechanism the Chinese government uses is through transferable land use rights and long-term land leases that generate revenue for cities outside the normal budget process.
“The Chinese changed the constitution to make land use rights transferrable, and then they implemented long term land leases of up to 70 years, depending on the type of property. The combination of the transferrable land use rights along with the long term leases has resulted in these booming real estate markets. They’re mimicking the way markets would operate even though the government retains ownership of the land.”
Anderson also presented and helped organize meetings for the National Tax Association in Washington, DC in May.
“I presented a paper on the ever popular state tax rankings. There are a large number of rankings that look at all 50 states on the basis of their tax and business climates. I deconstructed a dozen of the most popular tax rankings to look at precisely what they are measuring, how they are measuring it and what that really tells us. I tried to show how some rankings are useful for certain purposes and other rankings need to be used in other cases.”
Anderson will be following up his presentation at themeetings of the International Association of Assessing Officers in the fall with a version of his study that specifically looks at property tax rankings.