Monday, 10 December, 2018

New study of Seattle's $15 minimum wage says it costs jobs

Seattle city skyline Seattle was one of the first major American cities to adopt a $15 in June of 2014
Nellie Chapman | 28 June, 2017, 03:09

It said Seattle's minimum-wage law led to higher pay for restaurant workers without affecting the number of jobs.

The Washington Post reports that Seattle employers have fought back against the gradual raising of the minimum wage by cutting their payrolls, putting off new hiring, reducing hours, and letting their workers go. However, via a report out of the University of Washington this week, Seattle's minimum wage raise is costing workers hours by about 10 percent, and therefore these workers are losing income. The study, which was funded in part by the city of Seattle, found that workers clocked 9% fewer hours on average, and earned $125 less each month after the most recent increase.

Reich said multisite businesses employ a large percentage of Seattle's low-paid workers. As The Washington Post pointed out, the University of Washington study did not include large employers with locations in and outside of Seattle.

The researchers focused on "low wage" jobs - those paying under $19 an hour - and not just "minimum wage" jobs, to account for the spillover effect of employers raising the pay of those making more than minimum wage.

"Seattle Mayor Ed Murray defended the minimum wage law, saying that 'businesses across the city are competing for employees and our city is in the midst of a period of almost unprecedented growth" The Seattle Times article states.

Last week, a review by University of California at Berkeley economists found the law raised pay without hurting jobs in the restaurant industry.

The paper evaluates the effects as Seattle's minimum wage ordinance was phased in, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016.

Across the country, many states have increased minimum wages above the federal minimum of $7.25 an hour, which has been in place since 2009.

Jacob Vigdor, a public policy professor and one of the authors of the new report, stood by the team's findings. "The fact that we find zero employment effects when using methods common in prior studies - just as those studies do - amplifies these concerns".

It may still be too early to tell what the effects of a higher minimum wage on Seattle will be as the minimum continues to increase, but it does give a little insight to a possible negative outcome of the experiment. But some analysts doubt the study's methodology, and attribute the low-wage job decrease to Seattle's booming labor market. "Data is pointing to: Since we have to pay more, employers are looking for people with experience who can do the job from Day 1". It's also for politicians, as the Seattle Times story suggests. Don't blame it on the writer for reporting what's obvious to you (and me). but still not accepted by everyone.