March 29, 2024

They Said Seattle’s Higher Base Pay Would Hurt Workers. Why Did They Flip?

Mr. Vigdor said the two studies were broadly consistent when considering the effect both on workers employed at the time of the increases and workers who might soon seek employment. The minimum-wage increases helped people who were already working low-wage jobs, hurt people who weren’t yet working, and had a somewhat negative effect on pay over all. (Mr. Vigdor and his colleagues have revised the earlier paper so that the large negative effect they initially found after the second minimum-wage increase was smaller: an average loss of $74 a month instead of $125.)

Other researchers were more skeptical. When last year’s study came out, Ben Zipperer, an expert on the minimum wage at the liberal Economic Policy Institute, pointed out that it failed to adequately account for the fact that Seattle’s economy was growing rapidly when the minimum wage increases took effect.

In a booming economy, Mr. Zipperer argued, we would expect to see fewer workers employed at low wages — not because employers decide it’s not worth hiring people, but because the competition for workers bids up wages, and many low-paying jobs disappear and are replaced by somewhat higher-paying jobs.

Alternatively, many potential low-wage workers may decide it’s too expensive to live and work in Seattle even with the benefit of a higher minimum wage, leading them to leave the city or not migrate there in the first place.

In either case, it would be the boom, and not a minimum-wage increase, that was reducing the number of hours worked at low wages.

In an interview, Mr. Zipperer said he was unconvinced by the authors’ attempt to square this year’s findings with last year’s. He said that the relatively low number of people making less than $15 an hour in Seattle, the linchpin of the effort to reconcile the results, is consistent with the city’s booming labor market, which the authors still haven’t properly addressed.

Article source: https://www.nytimes.com/2018/10/22/business/economy/seattle-minimum-wage-study.html?partner=rss&emc=rss

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