8 ms·

What Minimum-Wage Foes Got Wrong About Seattle

70 points by wallace_f 8y ago

danjayh 8y ago
Did I miss something, or does he basically cite restaurant employment numbers and declare the hike a smashing success? While that's one metric, using only that metric to declare success seems just as arbitrary (& biased) as those who were selectively using other metrics to declare it a failure.
- _Schizotypy 8y ago
  maybe the reasoning is something like more people have money to spend eating out (also would include more shopping) feeding more money into those businesses which causes them to hire more people. this line of reasoning MAY be able to point to a larger systemic effect of raising the min wage
  - danjayh 8y ago
    True, this could be used as a sort of indicator for that, but I think a more clear-cut set of metrics to see such an effect would be participation rate and unemployment rate among low-skilled workers ... but I have no idea where one would find such data.
- Spooky23 8y ago
  Restaurants drive demand for minimum wage workers and have challenging margins. They print money in good times, and go broke quickly when things go bad. They tend to be a proxy for alot of other consumer facing businesses. They are also the most desirable low-wage jobs as the hours are more consistent. They're challenging to fill because you have to hustle at restaurants, while the average grocery store employee is much less utilized. Bussing tables is a much better gig than folding pants at the Gap, supermarket or whatever -- you easily lose 25-35% of your hours when weather or other variation reduces foot traffic.
- Retric 8y ago
  Opponents had citied a specific paper that was demonstrated incorrect. That does not disprove all downsides, but does disprove a specific argument.
- moorhosj 8y ago
  What you missed is that detractors, notably Tim Worstall at Forbes and Mark Perry at AEI, were specifically pointing to this metric to state their case against the wage increase. It isn't arbitrary to use the very metric presented by the detractors to prove their point invalid. example: http://www.aei.org/publication/seattles-new-minimum-wage-law-takes-effect-april-1-but-is-already-leading-to-restaurant-closings-and-job-losses/ http://www.aei.org/publication/seattles-new-minimum-wage-law...
- jellicle 8y ago
  The argument, very strongly made by minimum wage opponents, was that Seattle's restaurant industry would collapse entirely. Hacker News even ran several stories about the impending collapse. That... didn't happen, and it's important to hold predictors accountable if we want to make better predictions in the future.
  - burfog 8y ago
    It was starting to happen (with research published), and then the general nationwide economy started booming. It's easy to hide local problems when the national economy is amazing. If we hit a recession, the low-skill Seattle workers are going to suffer greatly. If you carefully pick the start and end points, you can "prove" a lot of things that just aren't so.
CydeWeys 8y ago
The title is overselling it. One paper was wrong. Plenty of other economists didn't see anything wrong with raising the minimum wage to $15/hour. There are figures that are too high, but $15 is not too high for Seattle.
- leereeves 8y ago
  Did Bloomberg change the title? The current title, "What Minimum-Wage Foes Got Wrong About Seattle", seems fair.
  - CydeWeys 8y ago
    Yes, they changed the title. The original title was "Seattle min wage hike results are opposite of economic dogma's predictions", the same as this HN submission. I guess they realized it was misleading, as I pointed out.
- jimmy1 8y ago
  > but $15 is not too high for Seattle. That is key in my view. We should do away with a federally mandated uniform minimum wage all together and instead mandate that states pay a minimum wage that makes sense for their state. Get all the smart economists in a room and figure out what formula makes sense whether its based on the state level GDP (or even county), cost of living in that area, economic opportunity, etc. While $15 isn't too high for Seattle restaurant workers, it is much too high for a rural North Carolina town with population 15,000 where there are a few restaurants in town and the average plate cost is 9 bucks and the center of the town is the Walmart shopping center.
  - ulkhf 8y ago
    It's almost as though central planning of an economy is hard.
- deleted 8y ago
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malvosenior 8y ago
I would like to know if the higher minimum wage resulted in higher prices for the end consumer. Has anyone in Seattle noticed this? I don't see how they couldn't. It seems to me raising minimum wage is just pouring gasoline on the inflation fire.
- wbl 8y ago
  Inflation that has missed targets negatively for a decade. NGDP targeting would say ease!
  - malvosenior 8y ago
    Only if you don't count housing, healthcare and education.
    - danmaz74 8y ago
      Inflation does count all those sectors. Which, by the way, would mostly be untouched by changes in minimum wages.
    - grigjd3 8y ago
      The minimum wage doesn't drive costs in housing, healthcare, and education.
      - malvosenior 8y ago
        How can it not drive up housing? Wouldn't the extra money these employees now make get sucked up into rent?
        grigjd3 8y ago
        The cost of housing is driven 100% by demand.
  - eru 8y ago
    Depends on what target you want to set. (Mostly, the exact target doesn't matter, as long as you meet it.) NGDP levels in America have mostly been on a straight line since 2009 or so. (But they had a big change in trend compared to before.) Still, that doesn't answer anything about the effects of minimum wage. An NGDP target would still make minimum wage laws a bad idea. But since NGDP evolution is fixed, you'd see an RGDP decrease and hence an inflation hike. The American sort-of Fed fixes inflation instead. If you are into this kind of thing, do read George Selgin's Less Than Zero. (Eg at https://iea.org.uk/publications/research/less-zero https://iea.org.uk/publications/research/less-zero). It gave me an appreciation of the classic gold standard---and how it managed to keep NGDP stable under the right regulatory circumstances, that I was missing before.
ghufran_syed 8y ago
I think the research as a whole is pretty clear - if you raise the minimum wage a small amount compared to the market rate, it has small positive effect on worker pay, and a small negative effect on business costs (ie costs go up a little bit) If you have a large increase above market wages, you have a large positive effect on worker pay (for those who continue to be employed) and a large negative effect on costs (costs go up a lot), leading to reductions in employment through businesses closing / increased automation. A simple thought experiment suggests it is certainly possible to set the minimum wage too high - if that weren’t the case, why not set the minimum wage to $1000 per hour?
chooseaname 8y ago
They[0] always look at restaurants. Go look at child care workers and see what happens to them. A restaurant can work with fewer employees, but child care facilities have to maintain a certain number per child. Would be interesting to see research into that aspect of raising wages. [0] Journalists
- Eridrus 8y ago
  What are the margins on child care? How elastic is demand for childcare? Not all child care has equally strict limits on the ratio (it depends where care is being provided), increasing wages may drive people to more loosely regulated child care, or just push it into the informal sector, or make more women stay home rather than work.
OscarCunningham 8y ago
Are there alternative economic models which correctly predicted this? How high do they think that we can make the minimum wage without affecting employment?
- Eridrus 8y ago
  I don't think this an indictment of the typical supply & demand model. The model is pretty flexible since the shape of the various curves will dramatically change what happens. The real argument isn't about the model, but rather the shape of the demand curve for low skill labor. I think taking the two versions of this study as separate analysis is interesting, since it shows a shift in employment from individual restaurants to chains. Which itself is a real impact from the rising minimum wage, but one not (itself) impacting labor.
- neolefty 8y ago
  The article says just a decent model would help — it claims there was a glaring flaw in the models that predicted disaster: > Much of the hand-wringing was based upon a deeply flawed University of Washington study. As we noted in 2017, the study’s fatal flaw was that its analysis excluded large multistate businesses with more than one location. When thinking about the impact of raising minimum wages, one can’t simply omit most of the biggest minimum-wage employers in the region, such as McDonald’s and other fast-food chains, or Wal-Mart and other major retailers. These are the very employers that were the main target of the minimum-wage law; indeed, the law established an even higher minimum wage of $15.45 an hour for companies with 500 or more employees.
hyperpape 8y ago
I have not read the new paper, but the NYT article that Bloomberg links to summarizes it rather differently. > A research team including economists from the University of Washington has put out a paper showing that Seattle’s recent minimum-wage increases brought benefits to many workers employed at the time, while leaving few employed workers worse off. (NYT) > The workers who worked the most ahead of the minimum-wage increase appeared to do the best....The workers who worked less in the months before the minimum-wage increase saw almost no improvement in overall pay — $4 a month on average over the same period, although the result was not statistically significant. While their hourly wage increased, their hours fell substantially....It’s the final group of workers — the potential new entrants who were not employed at the time of the first minimum-wage increase — that Mr. Vigdor and his colleagues believe fared the worst. They note that, at the time of the first increase, the growth rate in new workers in Seattle making less than $15 an hour flattened out and was lagging behind the growth rate in new workers making less than $15 outside Seattle’s county. This suggests that the minimum wage had priced some workers out of the labor market, according to the authors. (NYT) In addition, the Bloomberg article claims that the original research contradicts "the vast majority research on minimum wages" which holds that "modest, gradual wage increases have not been shown to reduce employment or hours worked in any significant way", which is irrelevant, because Seattle raised its minimum wage by 37% in one year--neither modest nor gradual. In short, this is not a summary to be trusted.
- Pfhreak 8y ago
  > Seattle raised its minimum wage by 37% in one year This is objectively false. There is no one year period in which Seattle raised it's minimum wage 37%. The most aggressive increase I can see was 18%, and it only applied to large employers in 2011-2012. https://www.seattle.gov/Documents/Departments/LaborStandards/OLS-MW-multiyearChart2019FINAL10118(1).pdf https://www.seattle.gov/Documents/Departments/LaborStandards...
  - hyperpape 8y ago
    I got the number from the NYT article, which said $9.47 to $11.00 in April 2015, then $11.00 to $13.00 in January 2016. That is a one year period, and a 37% increase. Here is another source that mentions $9.32. https://www.natlawreview.com/article/seattle-minimum-wage-increases-go-effect-april-2015 https://www.natlawreview.com/article/seattle-minimum-wage-in... I'm not sure why there are two different numbers, but it was extremely rapid. I'd be happy to leave it using the more conservative figures from your table that they increased it by 36% in two years, as that's still neither modest nor gradual.
bcatanzaro 8y ago
Clearly, there is some minimum wage that would hurt the economy, cause inflation and cost jobs. Is it $15/hr? How about $100/hr? So we shouldn’t be arguing about a principle (“minimum wages don’t hurt the economy”), but rather an amount (“$15/hr doesn’t hurt Seattle’s economy”). Articles like this irritate me because they’re about proving “the other side” wrong rather than engaging in reasonable debate.
- eru 8y ago
  And the question is whether minimum wage ever does anything good on net.
  - lotsofpulp 8y ago
    The real increases in quality of life would come from nationwide paid time off minimums, removal of "exempt" employees from overtime, removal of tipped employee exemptions, and removal of health insurance benefits for employers. That would force employers to hire more people, increase demand, and therefore increase pay, at the same time as giving people a decent quality of life.
    - eru 8y ago
      Sorry, I don't understand. How would outlawing jobs help people? We don't have minimum wage laws where I live, and it's one of the most affluent societies on the planet. So perhaps I am missing something.
      - lotsofpulp 8y ago
        I don’t see where I suggested outlawing jobs.
        eru 8y ago
        I thought we were talking about outlawing low paying jobs?
- 8y ago
kangnkodos 8y ago
"Now of course, we should consider the argument that Seattle’s economic growth has been so strong that it overwhelms any negative effects from the higher minimum wage." It's possible that without the minimum wage hike, there would have been even more than 150K jobs, and the minimum wage hike limited the number of jobs to only 150K.
leaky_valve 8y ago
I see 0 intellectual honesty from this article. 1. No reputable economists would make outrageous predictions like "if you do A I think B will definitely happen regardless of externalities"; 2. If you are going after a study go after its facts and logic, not the author's affiliation that's just disgusting; 3. It claims this subject cannot be studied with proper control. I don't even know what to say about that.
- ashooner 8y ago
  Yeah, I concluded that after scanning and seeing the "Some Job Killer" graph that essentially shows that the population in Seattle has increased since 1990.
ergothus 8y ago
I had a friend that was a manager at a chain restaurant in Seattle, and we had some interesting discussions. I'm a big fan of paying a living wage. I'm also not a fan of tipping (just raise the prices and pay people fairly). However, I have no experience in the industry. He has lengthy (20+ years) experience, from server, bartender, cook, and manager. (all from outside of Seattle - he was a recent transplant) He's a fan of tipping and hates the minimum wage increase. His experiences (+ fears, hard for me to say which is which) were that: * without tipping, even with the increased base rate, it was hard to get people to show up for the short but intense crunch periods, because with tipping people are used to being able to work a weekend shift and pocket several hundred dollars. * If you aren't in a university area or someplace that would have people with flexible schedules and a need for short bursts of money, you would have hiring issues in general, because people earning minimum wage would just go to a less demanding job with more convenient hours. One particular area of disagreement - he felt that the national chain's policies made it very hard for him to adjust to Seattle's quirks - rules made to pay $2-$4/hr didn't work here, but he couldn't change them and blamed Seattle's rules. I argued that if the business model didn't work, the answer was to change the business model, but it sounded hollow and elitist even to me (even while I still believe it). I've talked with a few other acquaintances that have done server jobs and they all echo similar thoughts - even those that hated tipping agreed that they would use it to get a lot of cash on short notice and were skeptical that the current system would survive a transition into a flat wage. What I've not heard is any ideas on how to DO that transition, or if it's worth doing. (I have beliefs, but not facts)
- FactolSarin 8y ago
  If the large chain won't adjust, that seems something that would give smaller businesses an advantage, and seems like a positive to my ears. As for tipping, people don't tend to tip based on quality of service (see Adam Ruins Everything) [https://www.youtube.com/watch?v=q_vivC7c_1k https://www.youtube.com/watch?v=q_vivC7c_1k], and instead tends to be based more on attractiveness and ethnicity. A normal wage is fairer.
  - Junk_Collector 8y ago
dssu 8y ago
From the paper they mention >The entirety of these gains accrued to workers with above-median experience at baseline; less-experienced workers saw no significant change to weekly pay. Approximately one-quarter of the earnings gains can be attributed to experienced workers making up for lost hours in Seattle with work outside the city limits. We associate the minimum wage ordinance with an 8% reduction in job turnover rates as well as a significant reduction in the rate of new entries into the workforce.
- deleted 8y ago
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- deleted 8y ago
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sremani 8y ago
I am usually against these kind of changes, but this argument has convinced me.. http://necsi.edu/research/economics/steeringecon http://necsi.edu/research/economics/steeringecon
- neolefty 8y ago
  Thank you! I found that very enlightening, regarding systemic thinking about the American economy, especially this paragraph: > How did we get here? Our analysis shows there have been two major regimes since 1960. Before 1980 too much money was being injected into the Labor loop. Consumers had more demand than investors could supply, and inflation was on the rise. After 1980, we entered a new regime that favored investors. The change in regime was likely due to tax changes implemented during the Reagan presidency, cutting taxes on investments. We see that this change was a good idea, but it went too far and has remained in place for too long. The big question then is how do we escape the capture of tax policy by investors who individually like being able to save but who collectively are extracting rent from consumers, at the cost of human development?
jandrewrogers 8y ago
Seattle's minimum wage hike has as a massive confounding factor the most extreme economic boom in Seattle's history. The wage hike could have significant adverse effects and you'd never notice in the current economic environment in that city. It should lead to serious doubt that this is replicable in most other cities or even Seattle in other times. The assertion that this demonstrates anything useful about minimum wages, rather than the fact that the city has a severe labor shortage and is swimming in money, is dubious. Show me the data from a city with median economic growth and median unemployment statistics and I would find it more convincing.
- neolefty 8y ago
  That's acknowledged in the second-to-last paragraph from the article: > Now of course, we should consider the argument that Seattle’s economic growth has been so strong that it overwhelms any negative effects from the higher minimum wage. No one should ignore that possibility and we will be among the first to acknowledge that this could be the case. We may never know for sure, because in economics you don’t get a chance to run control experiments; you only have the facts at hand.
dssu 8y ago
Link to the mentioned new paper. https://evans.uw.edu/sites/default/files/w25182.pdf https://evans.uw.edu/sites/default/files/w25182.pdf
skybrian 8y ago
Here is a blog post by one of the authors. In the preface he explains what he thinks he got wrong and what he believes now: https://perfect-free.typepad.com/the-perfect-and-the-free/2014/02/the-minimum-wage-is-a-lousy-anti-poverty-program.html https://perfect-free.typepad.com/the-perfect-and-the-free/20...
max76 8y ago
> The problem occurs when these folks are confronted by facts that are at odds with their belief systems. The options are to either rethink your ideology or alternatively ignore the data. Most participants seem to have done the latter. Especially with politically charged studies there will be conflicting data reported. It's hard to tell which data accurately collected and reported.
joshuaheard 8y ago
From the chart, it showed employment rising in the region overall, which probably erased any effect from only Seattle raising its minimum wage. I wouldn't describe the economic principal of Supply/Demand as "dogma", more like an established model. It states, all things being equal, rising costs will result in less demand. Here, the region overall is expanding jobs (Amazon, Microsoft, etc). So, this does not disprove Supply and Demand and the economic fact that artificially rising wages artificially lowers demand for jobs.
jahaja 8y ago
I'm curious to how US economists (or perhaps reporters) are able to ignore most of western-Europe when talking about labour costs. Shouldn't these countries be head deep in unemployment for the last 60 years or so if this was strictly true? What also always seem to go unmentioned is the wage share. Surely it can go up, not just down?
bigfartchili 8y ago
I wonder if negative results would be present had the economy been worse off. When your business has grown 10% because of a booming economy it’s easier to cover extra expenses. Will Seattle fair as well in a recession than other economies? I really doubt it.

70 points by wallace_f 8y ago

Did I miss something, or does he basically cite restaurant employment numbers and declare the hike a smashing success? While that's one metric, using only that metric to declare success seems just as arbitrary (& biased) as those who were selectively using other metrics to declare it a failure.

_Schizotypy 8y ago
maybe the reasoning is something like more people have money to spend eating out (also would include more shopping) feeding more money into those businesses which causes them to hire more people. this line of reasoning MAY be able to point to a larger systemic effect of raising the min wage
- danjayh 8y ago
  True, this could be used as a sort of indicator for that, but I think a more clear-cut set of metrics to see such an effect would be participation rate and unemployment rate among low-skilled workers ... but I have no idea where one would find such data.
Spooky23 8y ago
Restaurants drive demand for minimum wage workers and have challenging margins. They print money in good times, and go broke quickly when things go bad. They tend to be a proxy for alot of other consumer facing businesses. They are also the most desirable low-wage jobs as the hours are more consistent. They're challenging to fill because you have to hustle at restaurants, while the average grocery store employee is much less utilized. Bussing tables is a much better gig than folding pants at the Gap, supermarket or whatever -- you easily lose 25-35% of your hours when weather or other variation reduces foot traffic.
Retric 8y ago
Opponents had citied a specific paper that was demonstrated incorrect. That does not disprove all downsides, but does disprove a specific argument.
moorhosj 8y ago
What you missed is that detractors, notably Tim Worstall at Forbes and Mark Perry at AEI, were specifically pointing to this metric to state their case against the wage increase. It isn't arbitrary to use the very metric presented by the detractors to prove their point invalid. example: http://www.aei.org/publication/seattles-new-minimum-wage-law-takes-effect-april-1-but-is-already-leading-to-restaurant-closings-and-job-losses/ http://www.aei.org/publication/seattles-new-minimum-wage-law...
jellicle 8y ago
The argument, very strongly made by minimum wage opponents, was that Seattle's restaurant industry would collapse entirely. Hacker News even ran several stories about the impending collapse. That... didn't happen, and it's important to hold predictors accountable if we want to make better predictions in the future.
- burfog 8y ago
  It was starting to happen (with research published), and then the general nationwide economy started booming. It's easy to hide local problems when the national economy is amazing. If we hit a recession, the low-skill Seattle workers are going to suffer greatly. If you carefully pick the start and end points, you can "prove" a lot of things that just aren't so.

CydeWeys 8y ago

The title is overselling it. One paper was wrong. Plenty of other economists didn't see anything wrong with raising the minimum wage to $15/hour. There are figures that are too high, but $15 is not too high for Seattle.

leereeves 8y ago
Did Bloomberg change the title? The current title, "What Minimum-Wage Foes Got Wrong About Seattle", seems fair.
- CydeWeys 8y ago
  Yes, they changed the title. The original title was "Seattle min wage hike results are opposite of economic dogma's predictions", the same as this HN submission. I guess they realized it was misleading, as I pointed out.
jimmy1 8y ago
> but $15 is not too high for Seattle. That is key in my view. We should do away with a federally mandated uniform minimum wage all together and instead mandate that states pay a minimum wage that makes sense for their state. Get all the smart economists in a room and figure out what formula makes sense whether its based on the state level GDP (or even county), cost of living in that area, economic opportunity, etc. While $15 isn't too high for Seattle restaurant workers, it is much too high for a rural North Carolina town with population 15,000 where there are a few restaurants in town and the average plate cost is 9 bucks and the center of the town is the Walmart shopping center.
- ulkhf 8y ago
  It's almost as though central planning of an economy is hard.
deleted 8y ago
[deleted]

malvosenior 8y ago

I would like to know if the higher minimum wage resulted in higher prices for the end consumer. Has anyone in Seattle noticed this? I don't see how they couldn't. It seems to me raising minimum wage is just pouring gasoline on the inflation fire.

wbl 8y ago
Inflation that has missed targets negatively for a decade. NGDP targeting would say ease!
- malvosenior 8y ago
  Only if you don't count housing, healthcare and education.
  - danmaz74 8y ago
    Inflation does count all those sectors. Which, by the way, would mostly be untouched by changes in minimum wages.
  - grigjd3 8y ago
    The minimum wage doesn't drive costs in housing, healthcare, and education.
    - malvosenior 8y ago
      How can it not drive up housing? Wouldn't the extra money these employees now make get sucked up into rent?
      - grigjd3 8y ago
        The cost of housing is driven 100% by demand.
- eru 8y ago
  Depends on what target you want to set. (Mostly, the exact target doesn't matter, as long as you meet it.) NGDP levels in America have mostly been on a straight line since 2009 or so. (But they had a big change in trend compared to before.) Still, that doesn't answer anything about the effects of minimum wage. An NGDP target would still make minimum wage laws a bad idea. But since NGDP evolution is fixed, you'd see an RGDP decrease and hence an inflation hike. The American sort-of Fed fixes inflation instead. If you are into this kind of thing, do read George Selgin's Less Than Zero. (Eg at https://iea.org.uk/publications/research/less-zero https://iea.org.uk/publications/research/less-zero). It gave me an appreciation of the classic gold standard---and how it managed to keep NGDP stable under the right regulatory circumstances, that I was missing before.

ghufran_syed 8y ago

I think the research as a whole is pretty clear - if you raise the minimum wage a small amount compared to the market rate, it has small positive effect on worker pay, and a small negative effect on business costs (ie costs go up a little bit) If you have a large increase above market wages, you have a large positive effect on worker pay (for those who continue to be employed) and a large negative effect on costs (costs go up a lot), leading to reductions in employment through businesses closing / increased automation. A simple thought experiment suggests it is certainly possible to set the minimum wage too high - if that weren’t the case, why not set the minimum wage to $1000 per hour?

chooseaname 8y ago

They[0] always look at restaurants. Go look at child care workers and see what happens to them. A restaurant can work with fewer employees, but child care facilities have to maintain a certain number per child. Would be interesting to see research into that aspect of raising wages. [0] Journalists

Eridrus 8y ago
What are the margins on child care? How elastic is demand for childcare? Not all child care has equally strict limits on the ratio (it depends where care is being provided), increasing wages may drive people to more loosely regulated child care, or just push it into the informal sector, or make more women stay home rather than work.

OscarCunningham 8y ago

Are there alternative economic models which correctly predicted this? How high do they think that we can make the minimum wage without affecting employment?

Eridrus 8y ago
I don't think this an indictment of the typical supply & demand model. The model is pretty flexible since the shape of the various curves will dramatically change what happens. The real argument isn't about the model, but rather the shape of the demand curve for low skill labor. I think taking the two versions of this study as separate analysis is interesting, since it shows a shift in employment from individual restaurants to chains. Which itself is a real impact from the rising minimum wage, but one not (itself) impacting labor.
neolefty 8y ago
The article says just a decent model would help — it claims there was a glaring flaw in the models that predicted disaster: > Much of the hand-wringing was based upon a deeply flawed University of Washington study. As we noted in 2017, the study’s fatal flaw was that its analysis excluded large multistate businesses with more than one location. When thinking about the impact of raising minimum wages, one can’t simply omit most of the biggest minimum-wage employers in the region, such as McDonald’s and other fast-food chains, or Wal-Mart and other major retailers. These are the very employers that were the main target of the minimum-wage law; indeed, the law established an even higher minimum wage of $15.45 an hour for companies with 500 or more employees.

hyperpape 8y ago

I have not read the new paper, but the NYT article that Bloomberg links to summarizes it rather differently. > A research team including economists from the University of Washington has put out a paper showing that Seattle’s recent minimum-wage increases brought benefits to many workers employed at the time, while leaving few employed workers worse off. (NYT) > The workers who worked the most ahead of the minimum-wage increase appeared to do the best....The workers who worked less in the months before the minimum-wage increase saw almost no improvement in overall pay — $4 a month on average over the same period, although the result was not statistically significant. While their hourly wage increased, their hours fell substantially....It’s the final group of workers — the potential new entrants who were not employed at the time of the first minimum-wage increase — that Mr. Vigdor and his colleagues believe fared the worst. They note that, at the time of the first increase, the growth rate in new workers in Seattle making less than $15 an hour flattened out and was lagging behind the growth rate in new workers making less than $15 outside Seattle’s county. This suggests that the minimum wage had priced some workers out of the labor market, according to the authors. (NYT) In addition, the Bloomberg article claims that the original research contradicts "the vast majority research on minimum wages" which holds that "modest, gradual wage increases have not been shown to reduce employment or hours worked in any significant way", which is irrelevant, because Seattle raised its minimum wage by 37% in one year--neither modest nor gradual. In short, this is not a summary to be trusted.

Pfhreak 8y ago
> Seattle raised its minimum wage by 37% in one year This is objectively false. There is no one year period in which Seattle raised it's minimum wage 37%. The most aggressive increase I can see was 18%, and it only applied to large employers in 2011-2012. https://www.seattle.gov/Documents/Departments/LaborStandards/OLS-MW-multiyearChart2019FINAL10118(1).pdf https://www.seattle.gov/Documents/Departments/LaborStandards...
- hyperpape 8y ago
  I got the number from the NYT article, which said $9.47 to $11.00 in April 2015, then $11.00 to $13.00 in January 2016. That is a one year period, and a 37% increase. Here is another source that mentions $9.32. https://www.natlawreview.com/article/seattle-minimum-wage-increases-go-effect-april-2015 https://www.natlawreview.com/article/seattle-minimum-wage-in... I'm not sure why there are two different numbers, but it was extremely rapid. I'd be happy to leave it using the more conservative figures from your table that they increased it by 36% in two years, as that's still neither modest nor gradual.

bcatanzaro 8y ago

Clearly, there is some minimum wage that would hurt the economy, cause inflation and cost jobs. Is it $15/hr? How about $100/hr? So we shouldn’t be arguing about a principle (“minimum wages don’t hurt the economy”), but rather an amount (“$15/hr doesn’t hurt Seattle’s economy”). Articles like this irritate me because they’re about proving “the other side” wrong rather than engaging in reasonable debate.

eru 8y ago
And the question is whether minimum wage ever does anything good on net.
- lotsofpulp 8y ago
  The real increases in quality of life would come from nationwide paid time off minimums, removal of "exempt" employees from overtime, removal of tipped employee exemptions, and removal of health insurance benefits for employers. That would force employers to hire more people, increase demand, and therefore increase pay, at the same time as giving people a decent quality of life.
  - eru 8y ago
    Sorry, I don't understand. How would outlawing jobs help people? We don't have minimum wage laws where I live, and it's one of the most affluent societies on the planet. So perhaps I am missing something.
    - lotsofpulp 8y ago
      I don’t see where I suggested outlawing jobs.
      - eru 8y ago
        I thought we were talking about outlawing low paying jobs?
8y ago

kangnkodos 8y ago

"Now of course, we should consider the argument that Seattle’s economic growth has been so strong that it overwhelms any negative effects from the higher minimum wage." It's possible that without the minimum wage hike, there would have been even more than 150K jobs, and the minimum wage hike limited the number of jobs to only 150K.

leaky_valve 8y ago

I see 0 intellectual honesty from this article. 1. No reputable economists would make outrageous predictions like "if you do A I think B will definitely happen regardless of externalities"; 2. If you are going after a study go after its facts and logic, not the author's affiliation that's just disgusting; 3. It claims this subject cannot be studied with proper control. I don't even know what to say about that.

ashooner 8y ago
Yeah, I concluded that after scanning and seeing the "Some Job Killer" graph that essentially shows that the population in Seattle has increased since 1990.

ergothus 8y ago

I had a friend that was a manager at a chain restaurant in Seattle, and we had some interesting discussions. I'm a big fan of paying a living wage. I'm also not a fan of tipping (just raise the prices and pay people fairly). However, I have no experience in the industry. He has lengthy (20+ years) experience, from server, bartender, cook, and manager. (all from outside of Seattle - he was a recent transplant) He's a fan of tipping and hates the minimum wage increase. His experiences (+ fears, hard for me to say which is which) were that: * without tipping, even with the increased base rate, it was hard to get people to show up for the short but intense crunch periods, because with tipping people are used to being able to work a weekend shift and pocket several hundred dollars. * If you aren't in a university area or someplace that would have people with flexible schedules and a need for short bursts of money, you would have hiring issues in general, because people earning minimum wage would just go to a less demanding job with more convenient hours. One particular area of disagreement - he felt that the national chain's policies made it very hard for him to adjust to Seattle's quirks - rules made to pay $2-$4/hr didn't work here, but he couldn't change them and blamed Seattle's rules. I argued that if the business model didn't work, the answer was to change the business model, but it sounded hollow and elitist even to me (even while I still believe it). I've talked with a few other acquaintances that have done server jobs and they all echo similar thoughts - even those that hated tipping agreed that they would use it to get a lot of cash on short notice and were skeptical that the current system would survive a transition into a flat wage. What I've not heard is any ideas on how to DO that transition, or if it's worth doing. (I have beliefs, but not facts)

FactolSarin 8y ago
If the large chain won't adjust, that seems something that would give smaller businesses an advantage, and seems like a positive to my ears. As for tipping, people don't tend to tip based on quality of service (see Adam Ruins Everything) [https://www.youtube.com/watch?v=q_vivC7c_1k https://www.youtube.com/watch?v=q_vivC7c_1k], and instead tends to be based more on attractiveness and ethnicity. A normal wage is fairer.
- Junk_Collector 8y ago

dssu 8y ago

From the paper they mention >The entirety of these gains accrued to workers with above-median experience at baseline; less-experienced workers saw no significant change to weekly pay. Approximately one-quarter of the earnings gains can be attributed to experienced workers making up for lost hours in Seattle with work outside the city limits. We associate the minimum wage ordinance with an 8% reduction in job turnover rates as well as a significant reduction in the rate of new entries into the workforce.

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sremani 8y ago

I am usually against these kind of changes, but this argument has convinced me.. http://necsi.edu/research/economics/steeringecon http://necsi.edu/research/economics/steeringecon

neolefty 8y ago
Thank you! I found that very enlightening, regarding systemic thinking about the American economy, especially this paragraph: > How did we get here? Our analysis shows there have been two major regimes since 1960. Before 1980 too much money was being injected into the Labor loop. Consumers had more demand than investors could supply, and inflation was on the rise. After 1980, we entered a new regime that favored investors. The change in regime was likely due to tax changes implemented during the Reagan presidency, cutting taxes on investments. We see that this change was a good idea, but it went too far and has remained in place for too long. The big question then is how do we escape the capture of tax policy by investors who individually like being able to save but who collectively are extracting rent from consumers, at the cost of human development?

jandrewrogers 8y ago

Seattle's minimum wage hike has as a massive confounding factor the most extreme economic boom in Seattle's history. The wage hike could have significant adverse effects and you'd never notice in the current economic environment in that city. It should lead to serious doubt that this is replicable in most other cities or even Seattle in other times. The assertion that this demonstrates anything useful about minimum wages, rather than the fact that the city has a severe labor shortage and is swimming in money, is dubious. Show me the data from a city with median economic growth and median unemployment statistics and I would find it more convincing.

neolefty 8y ago
That's acknowledged in the second-to-last paragraph from the article: > Now of course, we should consider the argument that Seattle’s economic growth has been so strong that it overwhelms any negative effects from the higher minimum wage. No one should ignore that possibility and we will be among the first to acknowledge that this could be the case. We may never know for sure, because in economics you don’t get a chance to run control experiments; you only have the facts at hand.

dssu 8y ago

Link to the mentioned new paper. https://evans.uw.edu/sites/default/files/w25182.pdf https://evans.uw.edu/sites/default/files/w25182.pdf

skybrian 8y ago

Here is a blog post by one of the authors. In the preface he explains what he thinks he got wrong and what he believes now: https://perfect-free.typepad.com/the-perfect-and-the-free/2014/02/the-minimum-wage-is-a-lousy-anti-poverty-program.html https://perfect-free.typepad.com/the-perfect-and-the-free/20...

max76 8y ago

> The problem occurs when these folks are confronted by facts that are at odds with their belief systems. The options are to either rethink your ideology or alternatively ignore the data. Most participants seem to have done the latter. Especially with politically charged studies there will be conflicting data reported. It's hard to tell which data accurately collected and reported.

joshuaheard 8y ago

From the chart, it showed employment rising in the region overall, which probably erased any effect from only Seattle raising its minimum wage. I wouldn't describe the economic principal of Supply/Demand as "dogma", more like an established model. It states, all things being equal, rising costs will result in less demand. Here, the region overall is expanding jobs (Amazon, Microsoft, etc). So, this does not disprove Supply and Demand and the economic fact that artificially rising wages artificially lowers demand for jobs.

jahaja 8y ago

I'm curious to how US economists (or perhaps reporters) are able to ignore most of western-Europe when talking about labour costs. Shouldn't these countries be head deep in unemployment for the last 60 years or so if this was strictly true? What also always seem to go unmentioned is the wage share. Surely it can go up, not just down?

bigfartchili 8y ago

I wonder if negative results would be present had the economy been worse off. When your business has grown 10% because of a booming economy it’s easier to cover extra expenses. Will Seattle fair as well in a recession than other economies? I really doubt it.