Tuesday, 21 August, 2018

Does Raising The Minimum Wage Work? Seattle Has Seen Surprising Consequences

Does Raising The Minimum Wage Work? Seattle Has Seen Surprising Consequences Does Raising The Minimum Wage Work? Seattle Has Seen Surprising Consequences
Orlando Vargas | 28 June, 2017, 04:43

Indeed, the "costs to low-wage workers in Seattle outweighed the benefits by a ratio of three to one, according to the study", which was "commissioned by the city" and conducted by economists at the University of Washington. "The reduction in hours cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker".

The Fight for $15 has a history in NY - in 2012, hundreds of minimum-wage workers launched the movement by walking off their jobs to protest and demand a higher minimum wage.

Seattle boosted its minimum wage from $9.47 an hour to as much as $11 an hour in April 2015 and then to as much as $13 an hour in January of 2016, with the eventual goal of reaching $15 an hour. Several states across the country have already forced employers to pay more, with California and NY demanding wages as high as $15 per hour. Their wage will be, without-a-doubt, devalued by the forthcoming cost-of-living leaps which will be borne by them to support the increase to unskilled minimum-wage workers.

In 2014, Seattle voted to raise the minimum wage, which was $9.47 at the time. Critics say the drop in working hours for low-wage jobs is not necessarily a result of the minimum wage bump-the decline is due to Seattle's flowering economy, they say. Last year, California Gov.

Michael Reich, a UC Berkeley economics professor who was lead author on the Berkeley report, said he found the UW team's report not credible for a number of reasons.

One of the major limitations of the study, the Economic Policy Institute (EPI) points out, is that the data it analyzed excluded business with multiple locations, such as chain restaurants and big box retailers.

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The study of the Seattle minimum wage is titled "Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle", and is available at this link. This important because if a smaller company cuts payroll, it's still possible that a larger company could expand and thereby create more opportunities.

As to the substantial impact on jobs that the UW researchers found, Vigdor said: "We are concerned that it is flaws in prior studies. that have masked these responses".

It may still be too early to tell what the effects of a higher minimum wage on Seattle will be as the minimum continues to increase, but it does give a little insight to a possible negative outcome of the experiment. "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". And there are many indications that the higher wage is reducing employment.

© 2017 Seattle Times under contract with NewsEdge/Acquire Media.

The Fight for $15 operates on the faulty assumption that businesses will simply buck up and swallow the cost of rising labor expenses - that they can, essentially, already afford to pay more but simply choose not to.

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