Minimum wage killing Seattle jobs, according to UW study

Tuesday, 27 Jun, 2017

The economists studied how the increase in the minimum wage affected Seattle's restaurant industry where pay reached $13 per hour in large companies. And led politicians, labor advocates, and pundits to conclude that negligible employment effects from small wage increases meant big increases would work, too.

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. "We believe that Americans should earn at least $15 an hour and have the right to form or join a union", the platform said.

UW's report vastly contradicts findings released last week by the Institute for Research on Labor and Employment at the University of California, Berkeley. And it comes to a different conclusion than last week's study.

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. They were warned by economists that such an increase in the minimum wage would not have the desired effect.

"[We found that] the policy is working in the way it was intended", Berkeley author Sylvia Allegretto said. However, many of those studies looked at whole industries, where many workers made more than the minimum wage. The University of Washington team-Ekaterina Jardim, Mark Long, Robert Plotnick, Emma van Irnwegen, Jacob Vigdor, and Hilary Wething-analyzed data on individual workers' hours and earnings records from Washington's Employment Security Department.

Of course, as with all studies, there will be disputes about methodology.

In its coverage of the studies, the New York Times interviewed minimum wage proponents who explained why they thought the University of Washington study was flawed, arguing that in a booming market like Seattle, it's to be expected that low-wage hours worked should fall as employers bid up wages for all workers, low wage included. But the problem remains that low-wage workers in the U.S. are struggling to get by. The new base rate pleased labor activists and the politically powerful Service Employees International Union, but it has dealt a blow to the take-home pay of workers even before the hike has been completed.

"I'm even able to save a little money now", said Johnson, who's been part of the Fight for $15 movement since 2012.

Not everyone in Seattle thinks the minimum wage is to blame for the hours cut.

The city is gradually increasing the hourly minimum to $15 over several years. He runs five restaurants - three are within city limits - and also manages 200 employees. But an array of new regulations have collectively been tough on his business. Since the overall effect gets worse as the mandated wage gets higher, it's likely that more modest increases (say, to $8 or $9) would have elasticities closer to 0 and would thus be easier to justify on cost-benefit grounds.

"One piece of legislation after another, in a very progressive city, can add up", Fugere said.