This fall, voters will have their say on whether the state’s minimum wage should be higher than the current $9.47 with annual increases indexed to inflation.  Initiative 1433 would increase the state minimum wage to $13.50 by 2020, as well as mandate paid sick leave for every worker.  But voters should heed the warning of the University of Washington (UW) researchers hired by Seattle officials to study the impact of that city’s $15 minimum wage law.

The UW study reveals that while Seattle’s lowest-wage workers are earning slightly more than they were before the new wage law took effect, they have suffered reduced hours and lower rates of employment.  These cutbacks have largely offset the slight wage gains of those workers. 

Ironically, the study found the earnings gains those low-wage workers enjoyed would have happened anyway, thanks to Seattle’s booming economy.  And those gains would not have resulted in the “negative unintended consequence” of fewer hours and reduced employment opportunities that were caused by the city’s $15 minimum wage law.

Even worse, as a result of the “negative unintended consequence” of the city’s $15 wage law, Seattle’s lowest wage workers are actually doing worse compared to low-wage workers in other parts of the state since the wage law took effect.  The study says that despite the city’s hot economy, Seattle’s low-wage workers are “lagging behind” their counterparts from other cities with less robust economies. 

As the UW study summarizes:

“The major conclusion one should draw from this analysis is that the Seattle Minimum Wage Ordinance worked as intended by raising the hourly wage rate of low-wage workers, yet the unintended, negative side effects on hours and employment muted the impact on labor earnings.

The Seattle economy (as well as comparison regions in the state of Washington) is booming, and this strong macroeconomy has led to improved outcomes for low-wage workers. Yet, our best estimates find that the Seattle Minimum Wage Ordinance appears to have lowered employment rates of low-wage workers. This negative unintended consequence (which are predicted by some of the existing economic literature) is concerning and needs to be followed closely in future years, because the long-run effects are likely to be greater as businesses and workers have more time to adapt to the ordinance. Finally, we find only modest impacts on earnings. The effects of disemployment appear to be roughly offsetting the gain in hourly wage rates, leaving the earnings for the average low-wage worker unchanged.”

In their conclusion, the UW researchers include a warning that cautions against assuming a higher statewide minimum wage, such as the $13.50 wage proposed in I-1433, will have the same modest effects as Seattle’s wage law.  They point out a higher minimum wage could have significant negative impacts on regions in the state whose economies are not as strong as Seattle’s:

“Seattle’s strong economy may make it capable of absorbing higher wages for low-wage workers, and this capacity may not be present in other regions.”

Of course, even with this strong economy, Seattle’s low-wage workers are not doing well as low-wage workers in other parts of the state.  And that is with the city’s first phase-in of the minimum wage at $11.   

What will the impacts be of the current $13 wage on low-wage workers in the city, or the final wage of $15?  And what happens when Seattle’s boom comes to an end?

 Only time will tell.