UW study on Seattle’s $15 minimum wage: Part 6—Low wage workers might have been better off with no wage law

Jul 27, 2016

The University of Washington (UW) research team hired by the City of Seattle to study the impacts of the city’s $15 wage law shows that while low-wage workers are earning a higher wage, those gains have been offset by reduced hours and reduced employment opportunities.

The UW study also says that “most, if not all” of the earnings gains (which have been largely cancelled by the fewer hours they now work) are the result not of the city’s new minimum wage law, but are the byproduct of Seattle’s red-hot economy:

“In sum, Seattle’s experience shows that the City’s low-wage workers did relatively well after the minimum wage increased, but largely because of the strong regional economy. Seattle’s low wage workers would have experienced almost equally positive trends if the minimum wage had not increased. Although the minimum wage clearly increased wages for this group, offsetting effects on low-wage worker hours and employment muted the impact on labor earnings.”

What is more, low-wage workers in other areas of the state that do not have a $15 minimum law and where the economy is not as strong, enjoyed greater quarterly earnings greater gains than workers in Seattle. 

So, let’s recap.  “Most, if not all” of Seattle workers’ income gains are the result not of the city’s higher minimum wage, but a strong local economy.  Businesses have been forced to mitigate the impact of paying that higher minimum wage by cutting their employees’ hours.  Low-wage workers in other parts of the state, without the benefit of Seattle's surging economy, earned more money over the same period of time.

It appears as though low-wage workers in Seattle would be better off had the city not imposed the $15 minimum wage law.  The strong economy would have naturally increased their wages, and they would be working more hours because employers would not be forced to mitigate the impact of paying the artificially high minimum wage by cutting their workers’ hours.  They would not be “lagging behind” their counterparts in other cities.

As so many economists predicted, including multiple Nobel Laureats, the higher minimum wage is hurting the low-wage workers it was supposed to help.

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