Wednesday, 15 August, 2018

New study casts doubt on the benefit of Seattle's $15 minimum wage

This artwork by Donna Grethen relates to the debate over raising the minimum wage This artwork by Donna Grethen relates to the debate over raising the minimum wage
Alfredo Watts | 27 June, 2017, 07:31

"The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker", researchers concluded. Meanwhile, hourly wages for low-wage jobs increased by about 3%, according to the study.

There would be about 5,000 more low-wage jobs in the city without the law, the study estimated.

"The long-run effects of Seattle's minimum wage increases may be substantially greater, particularly since subsequent changes beyond a final increase to $15 per hour will be indexed to inflation", the new UW study says.

Raising minimum wages force businesses operating on tight budgets to increase the workload on more highly-skilled and salaried employees and to rethink new hires and the amount of hours employees work. But the Seattle study's results suggest small-scale employers can't-or won't-pay low-skill workers enough to survive.

Reich argued that comparing a booming economy like Seattle's with other areas in Washington state is not a fair comparison and that there are out-of-state cities with more comparable economies. Even before those increases took effect, Seattle already had the nation's highest minimum wage. The University of California, Berkeley, found in a study June 20 that the Seattle policy helped to increase wages while having little impact on employment.

The minimum wage has become a popular issue in recent years, making national headlines for local campaigns. The author of that report, Michael Reich, has criticized the UW's study.

The EPI study adds that the potential job loss in the UW analysis is upwards of 10 times larger than what most other research has determined thus far. The largest expense in most businesses is labor costs. In a second phase of the law's implementation, wages increased to $13 an hour.

Maybe conservatives who warned against the potential downsides of unprecedented minimum wage hikes weren't just shilling for big business and the wealthy after all. Minimum wage earners ended up taking less money home each month, although the study authors saw no impact on employment-another common fear of minimum wage critics. Other low wage jobs would possibly be eliminated altogether, ending up hurting most those workers SB81 was passed to help. But the problem remains that low-wage workers in the U.S. are struggling to get by.

"In too many ways, and for too many people, our incredible successes are also creating two Seattles", as former USA attorney and Seattle mayoral candidate, Jenny Durkan, put it. For them their minimum wage is zero, as explained by Jacob Vigdor, one of the authors of the UW study: "If you are someone trying to break into the labor market [and] get your first job - a young person or immigrant - that's where it really seems like it's become more hard".

The effects of a higher minimum wage have been hotly debated since the 1990s.