Minnesota’s Economic News — W/E 5/13/22
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The controversy over Seattle’s $15 per hour minimum wage continues.
To recap, in 2015, Seattle’s council raised the minimum wage from $9.47 to $11 per hour in 2015. A further increase to $13 per hour followed in 2016. It is set to rise to $15 per hour. Seattle’s council commissioned a group of economists at the University of Washington to study the effects on employment and earnings. In June, with the University of Washington team just about to release their findings, a report from economists at UC Berkeley emerged which found that
…wages in food services did increase—indicating the policy achieved its goal— and our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13.
Curiously, as Michael Saltsmann reported in Forbes,
The (first) report “was prepared at the request of the Mayor of Seattle,” according to the authors–apparently as a public relations prop. Less clear is why the study was done in the first place.
In July University of Washington team released their study. It found that
…the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. 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.
As Daniel Person at the Seattle Weekly wrote
To review, the timeline seems to have gone like this: The UW shares with City Hall an early draft of its study showing the minimum wage law is hurting the workers it was meant to help; the mayor’s office shares the study with researchers known to be sympathetic toward minimum wage laws, asking for feedback; those researchers release a report that’s high on Seattle’s minimum wage law just a week before the negative report comes out.
Emails prove the city council colluded with the UC Berkeley team
Person seems to have been correct. Emails released by the city council show that
The Seattle Mayor’s Office requested that Berkeley omit any mention of the forthcoming University of Washington report from its write-up. The original write-up of the Berkeley paper (available in the document dump) included a section critiquing the forthcoming University of Washington report. The Mayor’s office requested that Reich remove it from the report and press materials, and didn’t mince words on the reasoning: “Don’t want your positive news to serve as a teaser for the UW study.” Reich later responded: “I am convinced. Here’s an improved version of the release.”
The press release for the Berkeley study was written by the same PR firm (and same PR executive) used by the Fight for $15. Economist Michael Reich sent an already-drafted press release to Berkeley’s press shop and the Seattle Mayor’s office. This release was authored by Daniel Massey of the PR firm BerlinRosen, who also handles media and has acted as a spokesperson for the Fight for $15. Reich also looped in Paul Sonn from the union-supported, pro-$15 National Employment Law Project (NELP) for his feedback. (The Berkeley team has closely coordinated with Sonn and NELP on past minimum wage testimony and media work.)
Michael Reich and the Berkeley team rushed their work to meet a political timeline set by the Mayor’s office. Reich initially sent his report to the Seattle Mayor’s office on Sunday, June 18th, saying “Hope it’s in time for your Tuesday [minimum wage] event.” Reich explained in his initial email to the Berkeley press shop: “Sorry for the extremely short notice. I’ve been working morning to evening every one of the past seven days to complete this. The timetable moved up over the weekend.”
This matters for Minneapolis where the city council has just voted to raise the minimum wage to $15 per hour. The effects of that raise must be monitored. And that monitoring must be done more honestly than seems to have been the case in Seattle.
John Phelan is an economist at Center of the American Experiment.