A new study, released Monday, has found that the increase in Seattle’s minimum wage has led to reduced employment for workers and cut hours for those that kept their jobs. This essentially cancels out any benefits of the higher wages that the city had hoped for its workers.
In 2014, city council member Kshama Sawant pushed for the city to increase its minimum wage to $15 per hour, in attempt to improve the lives low-wage workers.
In response, Seattle signed in the Seattle Minimum Wage Ordinance and raised its minimum wage from $9.47 per hour in 2014 to $11 per hour in 2015, and later to $13 in 2016.
Using a variety of methods to analyze employment in all sectors, the study concluded that 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,” the study states. “Implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016.”
There is evidence that attributes more modest effects in regards to the first wage increase. But the recent phase-in had a more direct and harsher effect on the low-wage workers. It reduced the number of low-wage jobs and the hours of retained employees.
Businesses that pay their employees minimum wage tend to focus on how to keep their assets high and liabilities low, in regards to wages. And they do this by playing the same game as the government.
Seattle rose the minimum wage too high too quickly without giving the city time to adjust and operate under the new conditions.
This will serve as another example as to how other states should pay closer attention to how their government and private businesses interact with each other in order to reach a successful middle ground that works with both entities.