The minimum wage increase in Seattle to $13 an hour for large employers—the highest rate in the country—had major negative consequences for low-wage workers, according to a new study by the nonpartisan National Bureau of Economic Research.
In other words, exactly what conservatives and those who understand basic supply and demand predicted. The group of economists at the University of Washington concluded that the increase forced employers to cut hours for their workers and that payrolls for minimum wage jobs fell as well.
“We conclude 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,” the authors of the study wrote.
That might not seem like a lot, but we’re talking about a group of people where every penny matters.
As one can see, the wage increase had the opposite intended effect. Minimum wage earners ended up taking less money home each month, although the study authors saw no impact on employment—another common fear of minimum wage critics. Seattle currently has the highest minimum wage in the country.
“The goal of this policy was to deliver higher incomes to people who were struggling to make ends meet in the city,” said Jacob Vigdor, one of the study’s authors. “You’ve got to watch out because at some point you run the risk of harming the people you set out to help.”
What makes the study even more significant is that Seattle still has several more minimum wage increases to go. In 2014, the city passed a law that would eventually raise its minimum wage to $15 an hour. With several more hikes to go, one can expect even more economic damage to Seattle’s most vulnerable.
A number of cities in recent years have passed laws increasing their minimum wages. The issue became a hot topic during the 2016 Democratic primary where both Hillary Clinton and Bernie Sanders argued for a nationwide increase, with Bernie calling for $15 nationwide and Hillary calling for $12. One of the reasons for the discrepancy was fear from the Clinton camp that $15 an hour would have an adverse impact on employment.