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Study Shows Raising Minimum Wage in Seattle Did Little to Help Workers

Study Shows Raising Minimum Wage in Seattle Did Little to Help Workers

“Unexpectedly”

Minimum wage hikes sound great on the surface, but as we’ve been reporting here at LI, such hikes tend to do the opposite of their proponents’ stated intention.  From forcing businesses to fire employees, cut hours, and find technological replacements for workers, minimum wage hikes are counter-productive, even destructive to low-income workers.

For example, a new study from Seattle shows that “there was almost no effect on workers’ average total earnings” due to a combination of factors including fewer hours and a more difficult time finding a second job to make up those lost hours.

The Washington Post reports:

[T]he actual benefits to workers might have been minimal, according to a group of economists whom the city commissioned to study the minimum wage and who presented their initial findings last week.

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.

Accounting for these factors, the average increase in total earnings due to the minimum wage was small, the researchers concluded. Using their preferred method, they calculated that workers’ earnings increased by $5.54 a week on average because of the minimum wage. Using other methods, the researchers found that the minimum wage hike actually caused total weekly earnings to drop — by as much as $5.22 a week.

An increased minimum wage costs employers more and necessitates reducing margins and/or charging customers more.  Wages may increase for some, but the cost of goods and services rises as well . . . effectively eating into whatever gains workers lucky enough to keep their jobs and not have too high a reduction in hours might have experienced.

The Washington Post continues:

Increasing the minimum wage increases the costs of hiring workers. As a result, employers must accept reduced margins or customers must pay steeper prices.

If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase, workers’ total earnings could decline.

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.

Overall, there was almost no effect on workers’ average total earnings, but Vigdor pointed out that the average could be misleading. The consequences for many individual workers — both positive and negative — could have been more significant.

Workers employed by thriving businesses who did not lose any hours could have enjoyed welcome gains. On the other hand, workers who had a hard time finding a second job to make up for their lost hours might have been earning much less.

In Obama’s flailing economy, black workers have arguably suffered the most.  This fact has been foregrounded by both the right and by the progressive left, and has yet to be addressed effectively by this administration. Indeed, the Obama administration and Democrats are the most vocal proponents for pushing minimum wage hikes that have a demonstrably disproportionate negative effect on America’s black youth.

Yes, Obama and Democrats are aware of this, and no, they do not develop policies that address the reality of minimum wage hikes and their measurable failure; instead, they focus on “feel good, sound good” policies that appease the masses, harm businesses, and displace workers.

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Comments

Arbitrary compensation for progressive debasement of capital and labor, outsourcing and insourcing, and social justice-inspired disasters.

But it makes the so-called progressives FEEL so good about themselves now that they have DONE SOMETHING, even if the actual outcome is negative.

The point is to make involved politicians look good, & local progressives feel good. Also to give Seattle media a feel good story.

In that respect it’s a success.

DieJustAsHappy | July 31, 2016 at 2:39 pm

1) $8 ph x 30 hpw = $240 … $10 ph x 24 hpw = $240.
2) Who covers the 6 hour difference? Less customer service,
or tasks spread among other employees (falls under that “other tasks as assigned’ clause), or new ones hired, or Robbie the Robo.
3) I’d like to see some of the legislators that pass these bill appear on the legislative equivalent of “Shark Tank.”

Maybe we should consider selling the west coast to Mexico.

    DieJustAsHappy in reply to Old0311. | July 31, 2016 at 3:00 pm

    Sell it or give it one difficulty is that his would necessitate a really, really long wall!

    tom swift in reply to Old0311. | July 31, 2016 at 3:13 pm

    Hey! The US paid Mexico good money for all that dirt—$15 million. And in 1848, that was worth something; about thirty times what it’s worth today.

Ummm….

I guess many of you missed…or ignored…the Collectivist Der Donald advocating a FEDERAL minimum wage rate hike…

http://hotair.com/archives/2016/07/28/trump-advisers-mystified-over-new-endorsement-of-10hr-federal-minimum-wage/

I dunno why any of his advisers would be “mystified” by him being a stinking, lying, pathological Collectivist thug.

I coulda told ’em….

Subotai Bahadur | July 31, 2016 at 3:26 pm

1) This was done with no intention at all of helping those on the bottom rung.

2) Union contracts are based on the Minimum Wage PLUS a percentage of the Minimum Wage as the Union Minimum Wage.

3) Every increase in the Minimum Wage, increases the Union Minimum Wage, which also pushes up ALL Union Wages automatically.

4) This whole thing is just the Democrat Party plus the Unions deliberately taking away non-Union jobs to pad Union pachecks, which increases the amount of Union dues paid, which increases the Union contributions to the Democrat Party.

5) It worked.

Most Americans are woefully ignorant when it comes to the cost of employment. An $11.00 per hour employee doesn’t cost $11.00 per hour unless you’re paying them off the books. Government loves a higher minimum wage because that results in higher FICA payments. It also increases your workers comp payments, unemployment insurance, etc…

*dons progressive thinking cap*

The problem is obviously the greedy businesses. They should just pay people more, without trying to make a profit. They don’t need any more profit, they’ve made enough already!

*removes progressive thinking cap, before it causes a stroke*

it’s been a boon for the robo cashier business.

Invisible Hand: 999,999
Socialism: 0

For those keeping score.

You can’t repeal the laws of supply and demand.

If a black inner city youth spends one more hour a day on the streets instead of at a job, which is more likely:
1. He picks up a broom and sweeps it up.
2. He finds himself interacting with law enforcement and the justice system.
Number two results in a significant cost to society and taxpayer that will never be picked up in the employment statistics.

American Human | August 1, 2016 at 11:27 am

This will not make one iota of difference to those clambering for a higher minimum wage simply because it does not affect them.
This is the same with any liberal cause, “it feels good to me so I do it” because it helps me be re-elected. The actual affect on the people they are claiming to help is given no consideration whatsoever.
The same with illegal aliens and refugees, bring them in because they won’t be living anywhere near me so I don’t care what the effect is on the people. It helps me get re-elected.
This can go on and on with welfare, Obama Phones, Obamacare, etc.

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