Massachusetts Institute of Technology, United States
Political realignment in America has reshuffled party affiliations across occupational lines. Increasingly the party of unions and minimum wages is also the party of managers and professionals. In this article, we investigate whether this realignment among the actors setting wages within firms has politicized wage-setting. We first show that democrat managers are associated with increased pay for low-wage workers. This growing gap holds within metro-occupation-industry-year fixed effects. Manager wage setting is mediated by organizational position, driven by senior managers and HR rather than operations. We then show, consistent with coalitional behavior, that these positive wage effects are stronger for democrat-leaning low-wage service jobs than for increasingly Republican blue collar workers, and stronger for women than for men. Democrat managers raise pay more around salient minimum wage increases and become relatively more likely to pay \$15 wages specifically. Finally, we show that the Democrat wage premium has grown in recent years, and that this accounts for 12% of extra wage increases for low-wage workers during this period. Taken together, these results suggest a politicization of wage-setting, wherein managers' liberal commitments benefit frontline workers in their political coalition.
