Seattle, Washington decided to raise the minimum wage in the city to $15 an hour. It’s an incremental increase with the most recent being $13 an hour. When Seattle proposed the idea, economists and people with an ounce of common sense predicted long-term negative consequences. Supporters of the hike sneered and promised an effective model for cities around the United States.
The results are in, and it turns out those targeted by the sneering at were right. First, on wages:
This latest study from the UW team looks at the effects of both the first and second jumps. The second jump, in January 2016, raised the minimum wage to $10.50 to $13. (The minimum wage has since gone up again, to the current $11 to $15. It goes up again in January to $11.50 to $15.)
The team concluded that the second jump had a far greater impact, boosting pay in low-wage jobs by about 3 percent since 2014 but also resulting in a 9 percent reduction in hours worked in such jobs. That resulted in a 6 percent drop in what employers collectively pay — and what workers earn — for those low-wage jobs.
For an average low-wage worker in Seattle, that translates into a loss of about $125 per month per job.
So workers are making more per hour, but they’re working less, so they’re taking in less money, despite the increase.
As for jobs?
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.
Again, it’s not surprising this happened. The warnings went unheeded. Here’s more bad news:
As to how the UW team’s findings jibe with the Seattle area’s very low unemployment rate, tight labor market, and anecdotes from hospitality employers desperately seeking low-wage workers, Vigdor said that, based on data and what he’s hearing from employers, businesses are looking to hire those with more experience.
“Traditionally, a high proportion of workers in the low-wage market are not experienced at all: teens with their first jobs, immigrants with their first jobs here,” he said. “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.”
The people who need these jobs the most – teenagers and immigrants – are being shut out, particularly if they don’t have experience.
Naturally, the people who supported the increase will cover their ears, shouting, “LA! LA! LA! LA! LA! LA!” and pretend it isn’t happening.