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The saga of Seattle’s minimum wage increases has taken another turn.
A tale of two papers (again)
We wrote recently about how Seattle Council had commissioned a group of economists at the University of Washington to study the effects of its minimum wage increases. We explained that this study had 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.
We looked at how, curiously, Seattle’s council had also commissioned another study into the same thing. Released just before the University of Washington study, this second one 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.
As Daniel Person at the Seattle Weekly put it
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.
He who pays the piper
“The moment we saw it was based on flawed methodology and was going to be unreliable, the (University of Washington) study no longer speaks for City Hall,” says Councilmember Kshama Sawant.
But the University of Washington study is state of the art. It is certainly a leap forward from the use of proxy groups, such as fast food workers, as a stand in for low paid workers. This, incidentally, is the approach taken by the second group of researchers commissioned by the council. They, apparently, have got the contract to replace the University of Washington researchers.
Shameless in Seattle
You can argue from economic theory that raising minimum wages reduce the quantity of labor demanded. Often, this will get dismissed as pie-in-the-sky theorizing. Fair enough, economics is to be an empirical science.
But this should not mean that we simply shop around for whatever dodgy data supports an existing position. Seattle Council, and people like Kshama Sawant, are, frankly, uninterested in actual research and evidence. They have their ideology and reality will have to bend to accommodate that. It would be comforting to note that they are going to learn a lesson, but then we must remember that it is low paid workers who will pay for Ms Sawant’s ignorance.
John Phelan is an economist at Center of the American Experiment.
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