Seattle’s second wage increase to $13 reduced hours worked in low-wage jobs by around 9%
A new study from the National Bureau of Economic Research suggests that Seattle’s $15 minimum wage may be having the opposite effect than its intended purpose.
A working paper published this week by the NBER evaluates the effects of wage, employment and hours during the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the city’s minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016.
Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, researchers conclude that Seattle’s second wage increase to $13 reduced hours worked in low-wage jobs by around 9%, while hourly wages in such jobs increased by around 3%. 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. Evidence attributes more modest effects to the first wage increase. Researchers also estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.
“This strikes me as a study that is likely to influence people,” David Autor, an economist at the Massachusetts Institute of Technology who was not involved in the research, told the Washington Post. Autor said the study is “very credible” and “sufficiently compelling in its design and statistical power that it can change minds.”
The Post continues that the NBER working paper uses more detailed data than available in past research, drawing on state records of wages and hours for individual employees. As a result, the paper “is likely to upend a debate that has continued among economists, politicians, businesses and labor organizers for decades,” writes the news source.