The state percentage deviation from the federal level, (dsmw.sub.it) is constructed by taking the difference in state i's minimum wage level from the federal minimum wage, at time t, and then dividing it by the federal minimum wage at time t.(16.) Formally,
(dsmw.sub.it)= ((smw.sub.it) - (federcdmw.sub.t)) / (federalmw.sub.t).
(dsmw.sub.it)= (dsmw*.sub.it) if (dsmw*.sub.it)>0