Seattle’s $15 minimum wage experiment continues to produce readily identifiable winners and losers. The University of Washington research team tracking the experiment has released a new working paper that finds–predictably–that when employers are required to pay higher wages, those wages go to more experienced workers as the expense of the young and unskilled.
That’s our paraphrase. Here’s the language from the study abstract:
On net, the minimum wage increase from $9.47 to as much as $13 per hour raised earnings by an average of $8-$12 per week. The entirety of these gains accrued to workers with above-median experience at baseline; less-experienced workers saw no significant change to weekly pay. Approximately one-quarter of the earnings gains can be attributed to experienced workers making up for lost hours in Seattle with work outside the city limits. We associate the minimum wage ordinance with an 8% reduction in job turnover rates as well as a significant reduction in the rate of new entries into the workforce.
Washington Research Council analysts Emily Makings writes,
According to the paper, these findings jibe with the team’s 2017 findings because, “evidence suggests that employers responded to higher minimum wages by shifting their workforce toward more experienced workers.” (The 2017 paper found that the minimum wage increase resulted in reduced hours for low-wage workers, which lowered their earnings. Apparently the team updated its 2017 study this May. The revision moderates its findings of negative effects somewhat—instead of a $125 reduction in earnings a month, the earnings reduction is estimated to be $74 per month per job.)
The bottom line: “Seattle’s minimum wage ordinance appears to have delivered higher pay to experienced workers at the cost of reduced opportunity for the inexperienced.”
Readers interested in the minimum wage issue will also want to review Makings’s review of literature published last week, when the increase in the statewide minimum wage was announced.
MyNorthwest reports on the UW analysis, with comments from researcher Jacob Vigdor. This quote seems to sum up the policy question:
“I think when we evaluate this policy, we have to think if we are willing to accept that it is worth the benefit of putting more money in people’s pockets if we have this smaller group of people who are having more difficulty finding their first job,” [Vigdor] said…
Cutting off the first rung of the economic opportunity ladder will, of course, have lasting consequences.