Seattle’s Minimum Wage Hike May Have Gone Too Far | FiveThirtyEight

Minwage3 (Photo credit: Wikipedia)
Researchers at the University of Washington, asked by Seattle to study the increase in the city's minimum wage have some difficult news for the city and previous research on wages:

Seattle’s Minimum Wage Hike May Have Gone Too Far | FiveThirtyEight: The study is far from the last word on the impact of Seattle’s law, let alone the $15 minimum wage movement more generally. Indeed, just last week another study used similar methods to reach seemingly the opposite conclusion: A report from the Institute for Research on Labor and Employment at the University of California, Berkeley, found that Seattle’s minimum wage, “raises pay without costing jobs,” as a press release on the study announced.  
The UW study was the most data-complete study of its kind. The UW researchers work in only one of four states with complete hourly wage data. The other studies? Done in states that required "estimating" and "models" in the more extreme sense. (All research requires some extrapolation.) Other studies have focused narrowly, probably too narrowly, on fast-food and dining generally. There are many other businesses that must adjust salaries.
The Berkeley study, however, looked exclusively at the restaurant industry. That has been a common practice in minimum-wage research, because the industry is one of the largest employers of low-wage workers. But the University of Washington study suggests a possible flaw in that approach: That research, too, found essentially no job losses in the restaurant sector as a result of the city’s minimum wage hike. That suggests that studies that focused on the restaurant industry might have missed larger effects in other sectors.
Yes, with more data beyond McDonald's, it seems the wage increases do have a negative effect on the economic prospects of low-skilled workers. In fact, it is a 3-to-1 negative ratio worth about $125 a month. That's right... lower overall wages with a higher minimum wage.

Businesses cut hours, cut people, and made other adjustments (automation). The wage hit the tipping point at which other solutions were more advantageous than low-skilled workers.

The minimum wage fell in terms of real dollars as the majority earning that wage changed. See my previous post on this: most minimum wage earners are now the children of the middle- and upper-middle class. That means they don't "need" the money to survive.
Yes, two percent of workers 25 and older earn the minimum wage or less. That's a bit under a million people in that age group. (Remember, of the 2.1 million total earning minimum or less, half are 16 to 25.)
Seattle has proved to be a test case. The test isn't going as expected by the progressive city.

The problem is that low-wage jobs more often than realized serve other lower-income households. The wealthy do not, generally, eat fast food and shop at Walmart. These are partially closed loop communities, in which low-wage earners are served by other low-wage earners.

You can argue, as Seattle did, that the McDonald's at their airport serves people able to pay more. Yes, but have you paid for a burger at an airport? Or a theme park? Or a sports arena? Those are not normal prices. Those customers do absorb higher costs.

The Walmart in a rural area? It does not serve people earning $100K or more a year, statistically.

Yes, there are always exceptions, but the dirty secret is that low-wages are in low-income communities most of all. People live and work and shop in these islands of poverty. Education will help, services will help, but a higher minimum wage might not.


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