Reporter. In sum, Seattle does not prove the efficacy of raising the minimum wage as a way of helping low-income working people increase their incomes. The law called for the wage increases to be rolled out over time, with the $15 per hour minimum wage taking effect this year for large businesses. When the policy went into effect in 2015, Seattle’s minimum wage became not only the highest in the nation, but likely the most studied. Overall, the authors found no significant evidence of price increases associated with the minimum wage ordinance. Buszkiewicz said that the study findings may not be generalizable to all cities and states experiencing minimum wage increases given Seattle’s unique economic circumstances, however, he hopes that this study will serve as a model for other investigators to examine potential price hikes in their state or area. And Seattle, the first city with a $15 minimum wage, now forces large employers to pay at least $16 an hour. While minimum wage increases are generally popular with voters, they also tend to kick up extreme opposition from business owners, who warn of massive job losses and killing off new businesses. There are still questions about the policy’s impact that are harder to observe, such as new employees who may or may not have been hired had the minimum wage been lower. Raising the minimum wage is one of those wonderful-sounding ideas that, whenever tried, unfortunately never quite works the way it was promised. The first increase took place in April 2015, from the statewide rate of $9.47 to a new city-level minimum wage of $11.00. They found that the policy “reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent ... consequently, total payroll for such jobs decreased.” That means the total amount that employers paid to workers was less with the new minimum wage in place than projected payroll if the policy hadn’t gone into effect. Other co-authors for the food prices study include Anju Aggarwal and Adam Drewnowski of the UW School of Public Health; Mark Long from the Evans School of Public Policy and Governance; and Catherine House, who was a graduate student in the UW Nutritional Sciences Program. The minimum wage increases every year on January 1. Many employers will choose to hire fewer employees than they would have done. Employers, like restaurant owners, raised the alarm that the new wage would force them to close businesses, raise prices, fire workers, or move their businesses outside of the city limits. The recent push to raise the minimum wage to $15 per hour has many negative effects that few people take into consideration. In Seattle, Washington, one study found that wages rose about 3 percent, but the number of hours worked by those in low-wage jobs dropped about 9 percent a sizable amount that led to a net loss of earnings on average (Scheiber). Unfortunately, the Seattle study does little to resolve this question. raise prices or fiddle with workers’ hours, Ben Zipperer of the liberal Economic Policy Institute, Why New York’s free college program is still costing its students. What is more, it can also reduce job opportunities for low-skilled workers. A group of researchers at the University of Washington, with support from philanthropic groups, have been examining the effects of the wage increase on workers’ hours and take-home pay as well as business closures and the price of some goods like groceries. Studies of the effects of the Seattle wage hike have had different findings: A 2017 University of Washington study found that while wages went up, hours worked declined, resulting … As of January 2020, Seattle’s minimum wage is $16.39 per hour at companies with over 500 employees globally and $15.75 per hour in compensation at smaller businesses with no tips or healthcare benefits. Now that the first Seattle minimum wage increase has been in effect for more than ten months, and as local employers brace for the additional minimum wage hikes that will eventually increase … What the researchers have found over the last few years is quite a mixed story. After Seattle raised its minimum wage to $15 per hour — the magic number that liberals settled on — it commissioned the University of Washington to study the effects of the increase. Most seriously, skeptics argue that the researchers confused the effects of a minimum-wage increase with the effects of a hot labor market. But here’s what happened. Much of that success, though, can be attributed to trends separate from the minimum-wage law itself, such as the growth of Seattle’s tech sector and its … At the time the Seattle bill was passed, the federal minimum wage had stagnated at $7.25 since 2009, where it still is today. Here’s what happened. An interdisciplinary team of faculty and graduate students who have tracked various industries since the ordinance’s implementation just published two new studies: These papers take a closer look at the effects on child care businesses and on food prices during the policy implementation. Funding for the food prices study came from Arnold Ventures and the City of Seattle. If you want to gauge the impact of Seattle’s new $15 minimum wage in the coming months, follow the pho. Reuters. The true effect to low-income workers of Seattle’s minimum wage increase to $11 in 2015 was about 73 cents, researchers say, keeping in mind that the area’s strong economy might well have boosted wages anyway. This year, support from our founding contributors has helped us create projects that millions relied on to understand a year of chaos, and to keep their families safe. Ultimately, workers already employed either saw their take-home pay go up or stay roughly the same while working fewer hours. In Figure 10.7 "A Reduction in the Real Minimum Wage", the real minimum wage of $4.55 is still higher than the equilibrium wage of $4.00. In 2018, the minimum wage for large and small employers is set forth in the table below: 2020 Minimum Wage. The data did show, Zipperer argued, that all of the workers they studied were “better off after the minimum wage increase” — higher-hour workers earned more with a higher wage while the low-hour workers got the same pay for less work. Seattle has served as a national guinea pig for the policy since 2014, when its voted to gradually raise its minimum wage from $9.47 to $15.45 for large employers this year and $16 in … Restaurants Unlimited, which is based in Seattle, did raise … For more information about the supermarket food prices study, contact Buszkiewicz at buszkiew@uw.edu. … After the committee reached an agreement on a recommendation, it was proposed as a plan by the Mayor, and then passed as legislation by the Seattle City Council. Two recent studies examined the impacts of Seattle's minimum wage increase on employment. But a year later, the team published another paper that complicated their findings. © 2020 University of Washington | Seattle, WA, Two new studies published about the Seattle minimum wage ordinance, Responding to an Increased Minimum Wage: A Mixed Methods Study of Child Care Businesses during the Implementation of Seattle’s Minimum Wage Ordinance, The Impact of a City-Level Minimum Wage Policy on Supermarket Food Prices by Food Quality Metrics: A Two-Year Follow Up Study, Bait and switch: Mislabeled salmon, shrimp have biggest environmental toll, UW announces Maggie Walker Deanship in the College of the Environment, A.I. Now, workers are getting fewer hours, according to a new report. Seattle has served as a national guinea pig for the policy since 2014, when its voted to gradually raise its minimum wage from $9.47 to $15.45 for large employers this year and $16 in … He argued that the decline in low wage jobs was due to a hot economy boosting low-wage jobs into high-wage jobs, not the new minimum wage. During a boom, which Seattle … Researchers also surveyed 41 business directors at three different times during the rollout of the minimum wage policy. It may be that some recent minimum-wage increases have resulted in job loss, and that Seattle’s big increase — with plans to reach $15 for all employers by 2021 — … It’s one reason why the minimum wage has stayed so low nationally. Additionally, Neumark notes that federal subsidies that create incentives to join the labor force, like the Earned Income Tax Credit, paired with increases in the minimum wage can be more beneficial than just increasing the minimum wage alone. The second paper, “The Impact of a City-Level Minimum Wage Policy on Supermarket Food Prices by Food Quality Metrics: A Two-Year Follow Up Study,” was published in early January in a special issue of the online International Journal of Environmental and Public Health. Does the minimum wage need to increase… There are effects of raising the minimum wage. In 2016, California became the first state to adopt legislation that will gradually raise the minimum wage to $15 per hour. In this paper, researchers examined the effect of Seattle's minimum wage ordinance on local area supermarket food prices over time and as wages phased in to $15 per hour. As of January 2020, Seattle’s minimum wage is $16.39 per hour at companies with over 500 employees globally and $15.75 per hour in compensation at smaller businesses with no tips or healthcare benefits. Ben Zipperer of the liberal Economic Policy Institute wrote that the UW research is based on a “flawed comparison” between Seattle and the rest of the state. “This study illustrates how singular policies can affect more than just payroll and can shape organizational structure and service delivery,” said lead author Jennifer Otten, an associate professor in the School of Public Health. The Minimum Wage Study is a research effort dedicated to providing rigorous analysis of the impact of minimum wage ordinances in metropolitan regions and states. 2) What are the short-run effects of the Minimum Wage Ordinance on Seattle’s labor market? There are many negative effects of raising the minimum wage in the United States, in fact. If the federal minimum wage more than doubles to $15 per hour, many employers may be forced to hire one person instead of two for job openings. A new study of Seattle’s minimum wage hike shows who it helps, and who it hurts . Finally, researchers conducted open-ended, in-depth interviews with 15 child care directors. Other co-authors for the child care study include Katherine Getts of the UW School of Public Health; Heather D. Hill and Scott W. Allard from the Evans School of Public Policy and Governance; Jennifer Romich from the UW School of Social Work; Ekaterina Jardim, who was a postdoctoral researcher at the UW and now works for Amazon; and Anne Althauser, who worked at the UW Evans School of Public Policy and Governance and now works for the UW Office of Planning & Budgeting. The Minimum Wage Ordinance sets wages for employees working within city limits. We seek to provide insights that will be useful for policymakers and scholars. “The restaurant industry moans and groans about minimum wage increase, but the Seattle newspaper every month has a story about 40 new restaurants opening,” said Jennifer Romich, a … Workers make higher salaries. Those who were already working more hours before the wage increase saw “essentially all of the earnings increases,” while the workers who had fewer hours saw their hours go down, but wages go up enough so that their overall earnings didn’t really change. Today, Seattle’s wage is at $16 for large employers, and $15 for all other employers (unless they provide a certain level of medical benefits or employee tips, which allows them to knock it down to $12 an hour). The law called for the wage increases to be rolled out over time, with the $15 per hour minimum wage taking effect this year for large businesses. The walkouts would eventually help lead to Seattle passing a historic policy that continues to serve as an example to politicians and researchers to this day. The first paper, “Responding to an Increased Minimum Wage: A Mixed Methods Study of Child Care Businesses during the Implementation of Seattle’s Minimum Wage Ordinance,” was published in late December in a special issue of Social Work and Society International Online Journal. Seattle's Minimum Wage Increase. Seattle was the first major city to pass a bill that would increase the minimum wage to $15 an hour. The story for employees is much more varied. Center directors reported that employee wages and benefits comprise the majority of business expenses and that child tuition was the primary source of business income. While quite similar at first glance, these two questions address very different issues and require very different methods to answer. Not all of them were good. Seattle was at the vanguard of the movement to increase the minimum wage to levels as high as $15 an hour. It remains one of the highest in the country, and a useful case study as we head into a presidential election where a higher minimum wage has become the standard policy position for Democratic candidates. “I take this research as a cautionary tale for other cities like Seattle,” Long said, noting that Seattle’s booming labor market, especially at the high end and in technology, “is a very particular thing.”. An example of this is Seattle’s 2015 minimum wage increase to $15 an hour. “It’s easy to not think about the person serving you your food.” The very next day, a Burger King, two Subways, and a Chipotle all shut down after employees continued to walk out. Seattle's Minimum Wage Ordinance went into effect on April 1, 2015. (Seattle’s minimum wage was increased again in January 2016 to $12.00 for employers with 500 or fewer employees and $13.00 for other employers.) They theorized that a slowdown in new hiring for low-wage jobs could explain their earlier findings that overall payroll had gone down. With so many low-wage workers struggling, city leaders decided to increase the minimum wage. Critics of the UW researchers have seized on Seattle’s uniqueness to discount the UW findings. “This is really great news for low-wage earning Seattle shoppers,” said James Buszkiewicz, a doctoral candidate in the Department of Epidemiology and lead author on the study. By Allison Schrager. In 2014, Seattle passed a law to gradually raise the minimum wage to $15 an hour. The most common strategic response reported by the businesses has been to raise prices or fees of child tuition and to reduce hours of or number of staff. Ordinance, and particularly since the first wage increase phased in on April 1, 2015? In 2014, Seattle passed a law to gradually raise the minimum wage to $15 an hour. Help us add 2,020 founding contributors to our supporter base by the end of the year, and keep Vox free for all, by making a contribution today. A 10-percent increase in the price level leads to a reduction in the real minimum wage to $4.55 and an increase in employment from 32,000 to 35,600. They found that workers who were already employed at the low end of the wage scale in Seattle “enjoyed significantly more rapid hourly wage growth,” following wage increases in 2015 and 2016. Generally, those business owners who threatened to leave Seattle to evade the new wage haven’t been following through. Using state payroll data from about 200 child care businesses, the study examined multiple factors including the number of staff per business, staff wages and business payrolls beginning in 2014 and into 2016. University of Washington researchers continue to study the impact of the 2014 Seattle minimum wage ordinance. Seattle was at the vanguard of the movement to increase the minimum wage to levels as high as $15 an hour. Now, workers are getting fewer hours, according to a new report. Looking at the nation’s most intriguing experiments in local policy. Additionally, Neumark notes that federal subsidies that create incentives to join the labor force, like the Earned Income Tax Credit, paired with increases in the minimum wage can be more beneficial than just increasing the minimum wage alone. However, as we have seen, there is evidence that suggests it increases the cost of living by raising prices, especially for food. “Worker voices and folks taking to the street shifted the conversation about it and made the policy feasible,” Rachel Lauter, the executive director of Working Washington, an activist group that helped organize the protests, said. Employers always attempt to maintain profitability. It's unclear if it prevented low-wage workers from moving away, however, or helped them afford local rents. Overall, the authors found no significant evidence of price increases associated with the minimum wage ordinance. We want to add 2,020 more founding contributors to our supporter base by the end of the year. First, increasing the minimum wage is often seen as a solution to reduce poverty and a way to increase the standard of living, especially for people in low-paid work. Minimum-wage employees no longer have to work multiple jobs to make ends meet if they earn higher wages, said Alissa Barron-Menza, vice president of Business for a Fair Minimum Wage, possibly leading to more dedicated and happier employees. In Alberta, the $15 minimum wage … Seattle Minimum Wage Study . Seattle has served as a national guinea pig for the policy since 2014, when its voted to gradually raise its minimum wage from $9.47 to $15.45 for large employers this year and $16 in … Minimum wage was indexed with inflation each year and set to increase gradually. They looked at the same time period and same wage increase, but this time broke down the actual take-home pay of workers. And unlike many cities, Seattle was well situated, economically, to handle a large minimum wage increase, and the consequences were still mediocre, leaving the average low-wage worker virtually no better off. An example of this is Seattle’s 2015 minimum wage increase to $15 an hour. New York City, Seattle, ... “The Effects of a Minimum-Wage Increase on Employment and Family Income, ” that explores two scenarios: Raising the minimum wage to $10.10 or to $9.00. New York City, Seattle, and Washington D.C. also have plans to phase in a $15-per-hour wage floor. The price check occurred at four time points: one month pre- (March 2015), one month post- (May 2015), one year post- (May 2016), and two years post- (May 2017) ordinance implementation. The investigators collected prices for 106 food items from six large supermarket chain stores affected by the ordinance in Seattle and in six of the same-chain stores in King County and unaffected by the ordinance. To no one’s surprise, the uber-liberal University of California Berkeley released a study in June 2017 evaluating the effects of the increased minimum wage in Seattle from 2009 and 2016. Funding for the child care study came from Arnold Ventures, the City of Seattle and a Eunice Kennedy Shriver National Institute of Child Health and Human Development grant to the Center for Studies in Demography & Ecology at the UW. Hundreds of restaurants throughout the … I farm this one out to Jonathan Meer on FB. We cannot be confident that it has uncovered the causal effect of the Seattle minimum wage increase, which took effect in an economy that was already booming. The minimum wage for some large employers jumped from $11 to $13 from 2015 to 2016. Surveying employers, Romich and other researchers found the most common response to the wage increase was to raise prices or fiddle with workers’ hours, and a “very small percentage were thinking about withdrawing or leaving the city.”. In 2018, the minimum wage for large and small employers is set forth in the table below: 2020 Minimum Wage It is both a very wealthy city with fairly liberal politics — ranging from socially liberal businesspeople to a democratic socialist on the city council — and a high level of union penetration and a history of disruptive labor activism that goes back to its 1919 general strike. The report concludes that there are distinct trade-offs. The demand for higher minimum wage has gained increasing momentum.Cities like Seattle and San Francisco have implemented $15 minimum wage for some workers. The minimum wage increases every year on January 1. Claim: Fact check/Has Seattle's minimum wage increase impacted employment. Direct effects of a minimum wage increase. Help us reach our goal by making a contribution to Vox today, from as little as $3. (According to the Bureau of Labor Statistics, the number of jobs in restaurants and bars in the Seattle area has grown from 134,000 to 158,000 since 2015.) For more information about the child care study, contact Otten at jotten@uw.edu. Seattle's Minimum Wage Increase. The results are complex. The Minimum Wage Ordinance sets wages for employees working within city limits. When studying employment practices of big chain stores, von Wachter found that raising the minimum wage had the most positive effect in labor markets dominated by just a … One of them was Caroline Durocher, a 21-year-old Taco Bell employee, who said the decision was “easy.”. They will be forced to simply do without the additional help. "The effect of the minimum wage depends on a lot of … When studying employment practices of big chain stores, von Wachter found that raising the minimum wage had the most positive effect in labor markets dominated by just a … Minimum wage was indexed with inflation each year and set to increase gradually. Vigdor agreed that the effects of increasing the minimum wage could differ by time and place. And now, with Seattle's $15 minimum wage having been in effect for a couple of years, researchers from the University of California, Berkeley and the University of Washington in Seattle have released concurrent studies to try and decipher the ramifications. Seattle approved a plan last year to raise the city's minimum wage to $15 an hour by 2017, putting it on track to have the highest rate in the country along with San Francisco. Policymakers are still looking at Seattle as a case study in how a high minimum wage could actually work in practice. The claim is not (and never has been) that raising Seattle's minimum wage will cause the economy to become some howling wasteland of huddled masses desperately looking for a job. In a commentary referencing the studies, Washington Postwriter Ben Spielberg claimed that the increase in Seattle's minimum wage has been "perfectly fine for the economy." “What we’re getting right now isn’t fair and not right,” she told the Stranger, in reference to her wage of $9.19 an hour, then the city-wide minimum wage. Figure 10.7 A Reduction in the Real Minimum Wage. The city adopted a $15 minimum wage four years ago. If you want to gauge the impact of Seattle’s new $15 minimum wage in the coming months, follow the pho. The paper also sought to evaluate the potential for differential price changes that might be related to diet quality, including analyses by food group, level of food processing, and nutrient quality. “The restaurant industry moans and groans about minimum wage increase, but the Seattle newspaper every month has a story about 40 new restaurants opening,” said Jennifer Romich, a University of Washington social policy researcher. In April, Vox launched a way for readers to support our work with financial contributions — and we've been blown away by the response. “Typically null findings do not get that much attention, but in this case, if local food prices remain steady while earnings increase for low and minimum wage workers, then that could mean increased purchasing power for things like fresh fruit and vegetables for the consumers that need it most.”. 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