Seattle’s minimum-wage increase made the most vulnerable workers poorer

https://qz.com/1014759/seattles-minimum-wage-increase-made-the-most-vulnerable-workers-poorer/

by paradygm • 9 years ago

27 16 9 years ago

qz.com

amelius• 9 years ago

I wonder how this result translates to universal basic income.

lastflowers• 9 years ago

Whoops: http://www.epi.org/publication/the-high-road-seattle-labor-m...

Now most will latch onto the study (and their priors) and politicians will abandon any attempt to raise Minimum wage citing this and round and round we go...

res0nat0r• 9 years ago

I assume it is the study referenced below, I'd wait for more peer review.

https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...

Top comment:

A non-peer reviewed study that left out all large employers. Seriously! I can't believe the Post did a story on this. Wait for it to actually get published, and then we can talk about how any study on employment that leaves out all the national chain stores is totally bogus. Really this is very shoddy work. I'm disappointed with the Post for highlighting it. At least wait until it got published. This is one step above click-bait.

gcb0• 9 years ago

this made the rounds yesterday.

if anyone read the paper, they subjected exclusively fast food workers, and excluded employers that have locations out of state.

now let that sink in. exclusively local fast food places.

yet lots of places were probably forced to report it. one newspaper even reported it ironically. the title had a quotation in quotes to read something like "a 'very credible' study says..." .

s3r3nity• 9 years ago

I agree - I think it's a reaction to the similar stories that started blowing up on blogs recently that claim that the minimum wage increase had no effect, with similarly minimal evidence or review.

klarrimore2• 9 years ago

Almost study about minimum wage uses just restaurants. Even the most famous Card and Krueger did just fast-food in NJ. It's common practice.

hedora• 9 years ago

Unless the article is wrong, the authors of the study didn't actually track people that were paid low wages before and after the minimum wage increase.

Instead, they just looked at the number of hours worked for under $19/hour before and after the wage increases. Since $19 is close to the new minimum wage, it could be that the pay scales of everyone shifted up a bit, and jobs below $19 are now a lower percentage of all jobs.

Unless I'm missing something, this study is too sloppy to be newsworthy.

startupdiscuss• 9 years ago

It would be interesting to see a few other things:

1. Even though it made some people better off, and others worse off, did it reduce the number of people who need assistance?

2. Even if the amount of assistance is the same, if the number of people who need assistance is reduced, this would be a win.

To put it another way: if some people are not getting a living wage, and raising the minimum wage doesn't help them, then the only way to help them is direct payments (and, maybe education which has to paid for).

But if raising the minimum wage reduces the total number of these, it sort of "clarifies" who needs the help and who has skills that can be deployed.

sgwealti• 9 years ago

Counterpoint:

http://www.thestranger.com/slog/2017/06/26/25238844/the-morn...

Michael Reich, a UC Berkeley economics professor who was lead author on the Berkeley report, said he found the UW team’s report not credible for a number of reasons.

He said the UW researchers’ “synthetic” Seattle model draws only from areas in Washington that are nothing like Seattle, and the report excludes multisite businesses, which employ a large percentage of Seattle’s low-paid workforce. The latter fact was also problematic, he said, because that meant workers who left single-site businesses to work at multisite businesses were counted as job losses, not job gains in the UW study.

Reich also thought the $19 threshold was too low, and he said the UW researchers’ report “finds an unprecedented impact of wage increases on jobs, ten times more than in hundreds of minimum wage and non-minimum wage studies. … “There is no reason,” he said, that Seattle’s employers of low-paid workers “should be so much more sensitive to wage increases.”

dalbasal2• 9 years ago

This is one of those topics that really shows economics being the "dismal science."

The "economics 101" ideas applied to price floors (which ie what a minimum wage is) predicts lower volume (fewer jobs/hours). It doesn't predict how much, so it still might be worth having a minimum depending on the demand curve (which is never really known). OTOH, even the biggest proponents of minimum wage would admit that at some level minimum wage makes things worse. Most would agree that a $1,000 minimum wage would cause unemployment. Still, there's no real way of determining the "correct" amount, and even proponents seldom come up with a figure.

Anyway, being the dismal science economists just don't have any good way of settling this. This isn't the first study on the topic. If you look at it from a meta-research perspective, it looks like a null result with findings on both sides.

anonacct37• 9 years ago

Some quick clarification. In the US we don't have to rely as much on guess work. We have data on based on 20 years of $9-$10/hr minimum wage (in inflation adjusted dollars).

https://en.wikipedia.org/wiki/Minimum_wage_in_the_United_Sta...

dalbasal2• 9 years ago

A little further down the same article is "economic effects" where they cite some studies relating to this data. Results & interpretations fall on both sides of the equation. Whatever the effect of minimum wage is, we don't know from empirical research.

klarrimore2• 9 years ago

Better article imo https://www.bloomberg.com/view/articles/2017-06-26/seattle-s...

scarface742• 9 years ago

The answer is really simple -- get rid of the minimum wage entirely, let the free market determine how much someone should pay and increase the earned income tax credit amount and eligibility and make it easier for employers to distribute the credit with their employees paycheck. If that means slightly higher business taxes so be it. But, on the other hand, I'm a strong believer in "trickle up economics". If more poor people have money to spend it should help the economy.

manicdee• 9 years ago

How does your solution give poor people more money?

scarface742• 9 years ago

It gives poor people more money by a) "increasing the earned income tax credit" - a direct benefit from the government. b) Lower minimum wage makes it cheaper to hire people than to automate. C) More money flowing through the economy increases demand. Where there is demand, people find a way to start business to increase supply.

You'll notice that's just the opposite of "supply side economics".

Seattle’s minimum-wage increase made the most vulnerable workers poorer

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