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Major new study jolts liberals out of Fantasyland on $15 minimum wage

Steven Hayward has written about how liberals enjoy hiking cigarette and alcohol taxes so less is consumed but somehow totally fail to understand economic basics like supply and demand and price sensitivity when it comes to raising the minimum wage.

The much needed reality check is delivered via a game-changing new study described in yesterday’s Washington Post story, “A ‘very credible’ new study on Seattle’s $15 minimum wage has bad news for liberals”:

When Seattle officials voted three years ago to incrementally boost the city’s minimum wage up to $15 an hour, they’d hoped to improve the lives of low-income workers. Yet according to a major new study that could force economists to reassess past research on the issue, the hike has had the opposite effect.

The city is gradually increasing the hourly minimum to $15 over several years. Already, though, some employers have not been able to afford the increased minimums. They’ve cut their payrolls, putting off new hiring, reducing hours or letting their workers go, the study found.

The costs to low-wage workers in Seattle outweighed the benefits by a ratio of three to one, according to the study, conducted by a group of economists at the University of Washington who were commissioned by the city. The study, published as a working paper Monday by the National Bureau of Economic Research, has not yet been peer reviewed.

On the whole, the study estimates, the average low-wage worker in the city lost $125 a month because of the hike in the minimum.

As  Hayward further remarked: “Congratulations Seattle—you’ve managed to lower wages by $1,500 a year for the people who can least afford it. But I’m sure you feel good about how you’re fighting against inequality.”

What everyone, especially the Minneapolis City Council, needs to know

1. It doesn’t take rocket science to figure out that imposing a $15 minimum wage is going to hurt poor people who need a job the most.

2. Though the study hasn’t been peer reviewed yet, the National Bureau of Economic Research, who published the study, is the gold standard when it comes to studies like this.

3. Seattle commissioned this study themselves.

4. This is a compelling study that can change minds according to David Autor, a leading researcher in this field:

“This strikes me as a study that is likely to influence people,” said David Autor, an economist at the Massachusetts Institute of Technology who was not involved in the research. He called the work “very credible” and “sufficiently compelling in its design and statistical power that it can change minds.”

For the sake of Minneapolis, especially those who need their first job and work experience, let’s pray that this study brings the liberals who control the city to their senses before it’s too late.

Peter Zeller is Director of Operations at Center of the American Experiment.

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