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


"The timing suggests it's the minimum wage" as opposed to a booming economy.

Research about Seattle, one of the first cities to raise the minimum wage in 2014, presents mixed findings on the effects of increasing hourly pay. (Single-site employers, after all, by definition don't have the option of moving jobs to a different site; their only choices are to pay workers more or let them go.) Of course, that might turn out differently if a minimum-wage hike were enacted on the state or federal level instead of just the local one.

Although there has been no change to the federal minimum wage since 2009, when it increased almost 10% to $7.25, states and cities continue to enact pay floors for their workers.

The study, said to be the most comprehensive yet of the impact of a minimum wage hike, poses a dilemma for Governor Rauner.

That report found that the increase from the state's minimum wage of $9.47 an hour to $11 had only a minimal impact on businesses that rely on low-wage labor and a reduction of about an hour per week for minimum-wage employees. This "lowered low-wage employees' earnings by an average of $125 per month in 2016".

Interestingly, the University of Washington study also found little impact on the restaurant industry, but looking at the broader universe of jobs produced the unexpected results.

That finding may appear to contradict a study that came out last week on the minimum wage by economists at U.C. Berkeley.

Perhaps more importantly, whereas much of the previous literature examines low-wage industries (usually restaurants or retail) or teenagers as proxies for those impacted by minimum wage changes, this paper uses a comprehensive data set allowing assessment on employment for all categories of low-wage employees across industries and demographics.

Lawmakers in California, the nation's most populous state, voted a year ago to increase the minimum wage to $15 an hour by 2022.

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"[We found that] the policy is working in the way it was intended", Berkeley author Sylvia Allegretto said.

The study could overturn decades of conventional wisdom that said the benefits of raising the minimum wage outweigh the costs, the Washington Post reports.

Labor watchdogs said that the study should serve as a "wake-up" call to those who have led the campaign to drastically overhaul the minimum wage.

Yet the study will not put an end to the dispute.

A much-anticipated study released Monday by a team of researchers at the University of Washington is likely to intensify that controversy - just as Los Angeles heads toward its own minimum-wage increase for large businesses, from $10.50 an hour to $12 an hour on July 1.

But in Seattle, low-wage worker earnings were flat.

"Since the minimum wage law passed, we've increased people's hours", Moon said. He runs five restaurants - three are within city limits - and also manages 200 employees.

With the evidence mounting in support of minimum wage reform, detractors' arguments are crumbling rapidly. But an array of new regulations have collectively been tough on his business. But the increase to $13 one year later had a more dramatic effect.