A report by University of Washington economists has concluded that the most recent minimum wage increase in the city of Seattle is costing jobs. The Seattle Times reported:
“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.”
According to the Times, this translates into a pay reduction of $125 per month for a low wage earner. This can be a lot of money, according to a study author, Mark Long, who noted that “It can be the difference between being able to pay your rent and not being able to pay your rent.”
The study also indicated that there were 5,000 fewer low-wage jobs in the city as a result of the minimum wage increase. This is more than one percent of the approximately 440,000 private sector jobs in the city of Seattle in 2015, according to the American Community Survey. It is likely that most of the job losses occurred in the private sector, as opposed to government.
The study was partially funded by the City of Seattle, which enacted the minimum wage increase.
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Good time to revisit this study.
Since the September 2017 unemployment data is now available, it seems like a good time to revisit this study.
The resident labor force in Seattle has increased from 1,634K to 1,654K, leaving the unemployment rate unchanged from last year at 3.8%.
There was a loss of jobs in the fast food and health care industries, but there were enough increases in other industries to more than offset the losses.
If everything else was equal (it isn't), this is exactly what you would expect, and in fact, exactly what the University of Washington study found. There was a loss of jobs in businesses that pay less and $19 an hour, but an increase in jobs in businesses that pay more than $19 an hour.
If this were the coal industry in West Virginia, you would be calling this an unmitigated success.
A poor study
One of the major limitations of the study, as the Economic Policy Institute (EPI) points out, is that the data they used excluded business with multiple locations, such as chain restaurants and big box retailers. So the 40% of employees they left out work at places like McDonald's, Best Buy, and other stores (that rely heavily on the low-wage workers that the minimum wage boost applied to.) That oversight alone invalidates the study.
Every other study on the subject found the exact opposite, yet those studies are not being given equal coverage. For instance, a team led by Michael Reich, an economics professor at University of California-Berkeley, looked at the impact of the Seattle wage increase on the food industry over the same period and found that wages did in fact go up for restaurant workers, and that employment wasn't affected.
In study after study, though, the biggest benefit to a higher minimum wage is that poverty goes down. Because people can survive on their job income, they rely less on food stamps and other government assistance. This means it helps the working poor, (who are the exact people that both Democrats and Republicans agree need the most help.)
Whenever there is a program with that kind of unmitigated success, it stands to reason that both the right wing and the left wing should support it equally. Instead the right wing rolls out deeply flawed and disingenuous research to try to support nonsensical conclusions.
Just stop.