Seattle fake free lunch
Seattle fake free lunch
Seattle fake free lunch
Workers make sandwiches at an Amazon Go store in Seattle.
Photo:
Elaine Thompson / Associated Press
A new study of Seattle's minimum wage is presented in some corners as a progressive claim. But the details are more or less what any Econ 101 student would predict: bad news for young and unskilled workers trying to establish themselves in the economy.
In 2015-16, Seattle introduced a minimum wage of $ 13 per hour for large companies, defined as companies or franchises with more than 500 employees, and $ 12 per hour for small businesses. The old mandate was $ 9.47, which means that the increase was almost 40% at the higher end. In an article published last year, academics at the University of Washington gave a depressing estimate of the result. The number of hours worked in low-wage jobs was reduced by 9%, which implies that the average worker lost perhaps $ 125 per month. (That estimate was later revised to $ 74.)
These same researchers have now published a more detailed study, which tracks people who were already employed when the minimum wage increased. The study divides the effects into two categories: Experienced workers earned $ 84 per month more, on average, although about a quarter of the gain came from taking additional work out of Seattle to recover lost hours. The inexperienced workers did not obtain a real increase in profits. They just spent less time on the clock.
So, more profits, less work, mission accomplished? Some analysts think so. Some even suggest that the negative results of the 2017 study have been repudiated.
Not so fast. Start with the inexperienced workers whose profits were flat. Sure, they had more free time, but the "Fight for $ 15" is based on the idea that policy makers can raise salaries to provide a "living wage." For many workers, that did not happen. The lesson is that politicians use strong tools, which can not necessarily produce the desired results, even with the best intentions.
As for the comparison of the two studies, it is about apples and oranges. The 2017 report showed that Seattle's payroll, as a whole, contracted. The new report, which examined workers and employees, showed some profit gains. What is the missing piece? Lost jobs.
The authors note a sharp decline, around 5%, in the number of people entering the low-wage labor force in Seattle each quarter. A graph shows that the city used to follow up roughly with the rest of the state of Washington on this metric. The lines separated when the minimum wage passed. If Seattle had kept up, something like an additional 500 people would join the low-wage labor force every quarter.
The divided result of the new study coincides with economic theory. Workers who create enough value to guarantee Seattle's minimum wage will have a fine. The damage is not seen: thousands of young or unskilled workers who have more difficulty finding that first job.
Progressives never learn that the laws of economics can not be repealed. This year, the Seattle minimum wage increased to $ 15.45 per hour for large employers, and in January it will reach $ 16. For small businesses, the fee is $ 14, and soon it will be $ 15. Those costs are easier of supporting for companies in this fast-growing economy, however, studies are already showing negative effects on entry-level workers. What will happen to them when the economic tide comes out?
It appeared on November 1, 2018, print edition.
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ORIGINAL ARTICLE THE WALL STREET JOURNAL
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