Earlier this month, 17 states and localities raised their minimum wage. Ten California municipalities saw wage increases, with the general wage floor rising as high as $15.20 an hour in Emeryville, California. In San Francisco, where recent research has shown the negative impacts of minimum wage hikes, the city still increased its starter wage to a high of $14 per hour.
Unfortunately, they're not alone. Seattle, Washington embraced the Fight for $15—the union-backed campaign for a $15 hourly wage nationwide—three years ago, bucking Economics 101 to appease the labor lobby. If only Mayor Ed Murray could rewrite history.
A new University of Washington (UW) study found that Seattle's incoming $15 mandate has reduced hours, earnings, and jobs for entry-level employees. Read for yourself:
“Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.”
That's right: Seattle's wage hike cut earnings by an average of $125 per month because of reduced hours. To put it into perspective, the number of hours worked in Seattle by employees in low-wage jobs fell by 3.5 million hours per calendar quarter. The Employment Policies Institute profiled one affected business, a Subway franchise that slashed staff because hiring became too expensive. See here:
While employees at Subway and other businesses see a bump in hourly pay, their bump isn’t translating into more money in their bank account. Wasn't that the whole point of the Fight for $15?
The UW study is the most unequivocal repudiation of the wage hike movement yet. According to the Massachusetts Institute of Technology's David Autor, one of the country's leading labor economists:
“This is a study that has the power to move people’s beliefs. It will have a substantial impact on the debate. It suggests we should be proceeding cautiously when we start pushing minimum wages into ranges where they are pretty significant.”
That's not all. The study's preliminary findings were so damning that Mayor Ed Murray appears to have commissioned a separate University of California—Berkeley study to control the damage. The UC Berkeley study was released a week before the UW study, lavishing praise on Seattle's wage hike. Its co-author? Michael Reich, a vocal proponent of wage hikes, who alleges that “Seattle’s minimum wage ordinance has raised wages for low-paid workers, without negatively affecting employment.”
The Mayor’s Office knew the unflattering UW report was coming out, and reached out to other researchers to kick the tires on what threatened to be a damaging report to a central achievement of Ed Murray’s tenure as mayor.
It just shows the lengths to which Fight for $15 advocates will go to save face, even when the empirical evidence stacks up against them. Communities should embrace wage hikes with caution—lest they become another Seattle.