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Published: Thu, June 29, 2017
Economy | By Melissa Porter

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

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

The analysis, conducted by the University of Washington, said Seattle's most recent increase to $13 per hour increased pay in low-wage jobs by 3 percent since 2014. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees' earnings by an average of $125 per month in 2016.

In 2015, a Seattle law was put into effect that would see all businesses within the Washington city implement a minimum wage of $15 per hour by 2021. They argue that, after accounting for hour and job reductions, low-wage employees ended up being paid $120 million less a year (by single location Seattle businesses).

The first study, by a team of researchers at the University of California, Berkeley, supports the conclusion of numerous studies before it, that increasing the minimum wage up to a level that is about half or less of an area's typical wage leads to at most a small reduction in employment. Many variables affect what a company pays workers and in a healthy economy those effects are less pronounced.

But a controversial new study out Monday shows that the wage hike may be hurting workers instead. And when youths can't get summer work experience, they lose out on more than just a paycheck that can go toward movies and shopping.

Economists at the University of Washington were given access to administrative data that include the earnings and hours of individual workers in Washington State, allowing them to precisely identify workers by the wages they made.

According to that data, Seattle's minimum wage law is doing exactly what it intended and that's "raising pay for low-wage workers, without negatively affecting jobs". In the meantime, the added labor costs also will force the cost of living upward, making the decline for unskilled workers even more dramatic. So it is with Seattle's minimum wage.

Researchers at the University of Washington, who were commissioned by the city, found that when wages went up to $13 in 2016, low-wage workers saw their hours drop by 9%.

Now that a number of businesses have begun paying their employees $15 per hour, have these warnings been proven accurate? The city is scheduled to finally hit $15 an hour at the start of next year.

Based on the current data, it comes out to about $125 per month for low-wage earners, Dori pointed out.

Their findings are devastating for supporters of a higher minimum wage.

The report also estimated that there are about 5,000 fewer low-wage jobs in the city than there would have been without the law. But the UW study, importantly, looked at the impacts on low-wage employment beyond the food-service industry. The Berkeley group conducting the study, as reported past year by the Albany (N.Y.) Times Union, has conducted numerous studies, often funded by labor groups, while always concluding that an increase to the minimum wage would provide economic benefits. It found that for every 10 percent that the minimum wage rose, wages in the industry rose almost 1 percent, and that there was no discernible effect on employment.

A high minimum wage may sound like a simple way to provide a living wage.

Long said both studies agree that wages are up, and that there was no overall decrease in employment.

It's not quite book-cooking, but there's a clear effort by the unions to obscure the likely harmful effects of minimum wage increases like Seattle's.

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