New Study: High Minimum Wage in Seattle Caused No Employment Losses

This Labor Day marked a year of little or no wage gains for most U.S. workers. But for low-wage workers, a report released today from UC Berkeley reveals good news.

The report from the Center on Wage and Employment Dynamics analyzes the effects of minimum wage policies in the six large U.S. cities that were first to raise the minimum wage higher than $10 – Chicago, Washington D.C., Oakland, San Francisco, San Jose and Seattle.

The team of economists found significant pay increases and no significant employment reductions in the six cities. In Seattle, the unemployment rate dipped from 5.7 percent in 2012 to 3.6 percent in 2016.

But more jobs does not necessarily mean more quality jobs. The tech boom in Seattle has meant a boom in high-paying jobs that have driven up housing prices and the cost of living. The median annual earnings in Seattle jumped from $45,821 in 2012 to $51,976 in 2016. An increased minimum wage has little to no effect on the median wage.

What matters is what minimum-wage workers are able to do with their money. In 2012, a minimum-wage worker pulled in 37 percent of the median wage. Despite the higher wages in Seattle, in 2016, a minimum-wage worker pulled in 47 percent. That’s a pretty big jump in their ability to survive in an increasingly unaffordable city.

The Fight for $15 campaigns that began in 2012 set a new wave of state and local minimum wage policies in motion. Today, ten large cities, seven states, and dozens of smaller cities and counties are phasing in minimum wages in the $12 to $15 range. Similar policies are being considered in other cities and states across the country. To distinguish the effects of the policies from other economic changes, the authors use state-of-the-art statistical methods and compare U.S. Bureau of Labor Statistics data on these cities with 173 metro counties across the U.S. that did not experience a minimum wage change.

The new report casts further doubt on a 2017 University of Washington study that had found large negative employment effects when Seattle’s minimum wage increased to $13. Critics argued that the UW study was not able to take into account the effects of a job boom in Seattle that did not occur in the rest of Washington State, or that many jobs had to hire above minimum wage in order to fill their employment rolls.

The federal minimum wage remains $7.25, unchanged since 2009.

 

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