Seattle may have pushed their luck too far when it comes to a higher minimum wage for workers. The debate, which has been raging across the country over the last few years, has seen economists on both sides go back and forth about how effective raising the minimum wage would be for low-wage workers.
The question has become - "How high is too high?" for minimum wage.
Seattle may have found the ceiling. Back in January of 2016, Seattle's minimum wage was raised from $11 per hour to $13 for large employers - the second big increase in less than a year.
Now, new researched released by a team of economists at the University of Washington suggests that the dual wage hikes may have been too much for Seattle businesses.
According to the report, the increase led to steep declines in employment for low-wage workers, as well as a drop in hours for those who were able to keep their jobs. What's worse - the negative impact of those lost jobs and hours were more than offset by the benefits workers enjoyed thanks to the higher wages.
On average, low-wage workers made about $125 per month less thanks to the new ordinance.
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. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.
The paper's findings are preliminary, and have yet to be subjected to peer review. The authors also warn that that even if their results are confirmed, their research still leaves quite a few unanswered questions, including how does the minimum wage affect individual workers and businesses. The authors point out that the paper does not address whether displaced workers were able to find work in other cities, or with so-called entrepreneur apps like Uber and TaskRabbit.
The research will likely become a big part of the national conversation about minimum wage. Democrats have long promoted a "$15-per-hour" federal minimum wage, while some cities have already taken steps to raise minimum wages for workers.