After last week’s posts, we thought we were finished writing about the minimum wage for a while. But the attention the Washington Post’s Wonkblog paid to the UW study deserves a brief mention. It’s a reminder of the national interest in the Seattle experiment, even as other cities and states pursue their own wage hikes.
Wonkblog writer Max Ehrenfreund reviews the research and reports the mixed results.
The average hourly wage for workers affected by the increase jumped from $9.96 to $11.14, but wages likely would have increased some anyway due to Seattle’s overall economy. Meanwhile, although workers were earning more, fewer of them had a job than would have without an increase. Those who did work had fewer hours than they would have without the wage hike.
He points out the role automation may play in the workplace.
Jacob Vigdor, an economist at the University of Washington and one of the authors of the report, speculated that technology could limit the benefits of increasing the minimum wage. If it becomes easier for employers to replace their workers with machines, they will be more likely to respond to wage hikes by making fewer hires.
The piece is a good overview of the UW study of the Seattle wage law and its effects to date.
The Seattle Times editorial board uses the study to caution partisans on both sides of the debate not to overstate the effects of raising the minimum wage. The editorial also suggests why the Seattle experiment may prove to tell us little about how the wage hike would affect businesses and workers elsewhere.
The clearest message from the research is the most obvious: Seattle’s economy is white hot, with job growth triple the national average. That was a reason that the march toward $15 an hour (by 2017 for big employers, 2019 for small employers) had a negligible effect on business openings.
And workers who held jobs in this economic utopia were earning more — about 73 cents more an hour — as the law intended. That figure is based on a complicated economic analysis that modeled Seattle’s economy without a $15 wage law — dubbed “synthetic Seattle” — and compared it to the “real Seattle” with the higher wage.
But there were trade-offs.
Significantly, the UW study found that the wage law “appears to have lowered employment rates of low-wage workers — creating an estimated 1.2 percent drag on jobs compared to “synthetic Seattle.”
So we see minimal and mixed outcomes in a city enjoying extraordinary economic growth. The lessons learned in Seattle so far appear to have limited generalizability.