Moving the Goalposts on Seattle’s Minimum Wage
Type “Seattle $15 minimum wage” into Google and you’ll be greeted with a variety of hot takes from both sides of the issue, but none are quite as incendiary and prolific as those from Tim Worstall. The Forbes blogger believes that the best minimum wage is $0 and cannot, for the life of him, “think of any good arguments in favour of a rise in the minimum wage.”
Naturally, such a predisposition led him to assert from the get-go that the effects of Seattle’s wage increase were “not going to be good.” Two of his top five articles on Forbes are temples to his prescience on the matter.
Unfortunately for Worstall, his fondness for flexing his foresight allows curious individuals to go back and examine his economic predictions.
Which is exactly what I did.
In June 2014 (soon after Seattle’s minimum wage ordinance was passed) Worstall stared into his crystal ball and wrote an article, humbly entitled: “We Can Predict The Effects Of Seattle’s $15 An Hour Minimum Wage.”
This was his very first piece for Forbes on the subject and he wrote it as something of a touchstone, “so that in a few years’ time, when the new wage is fully implemented, we can turn around and say ‘I told you so’.” Neener, neener.
Here is what he said was going to happen:
The first and most obvious effect of a $15 an hour minimum [sic] is that there are going to be job losses.
And
This $15 an hour in Seattle will be around 60% of the local median wage. We would therefore expect to see reasonably large unemployment effects.
He summarizes
So that’s what we would expect from this rise in the Seattle minimum wage to $15 an hour. Some rise in unemployment. A much larger rise in high school graduate unemployment relative to the general unemployment rate. And a significant reduction in the job related benefits that workers receive.
Terrific. From the outset, we knew what metrics to examine in order to see if Worstall’s hypothesis would be proven correct. He was very clear with his language: Seattle would have a rise in unemployment, a rise in high school graduate unemployment relative to general unemployment and a reduction in job-related benefits. That’s doesn’t leave a lot of room for ambiguity or misinterpretation.
About a year later, in April 2015, Worstall’s confidence remained, but the specific contours of his predictions did not. In a post titled, “And Here Is, As We Said, The Effect of Seattle’s $15 An Hour Minimum Wage,” he adds a different metric by which to judge Seattle’s minimum wage.
The place we would see [a reduction in the amount of labor] would be in the restaurant industry, as that’s the industry that employs around 50% of minimum wage labour and thus that’s the industry where it is most binding.
A couple of months later he continues
Recall, we’re not insisting that a rise in the minimum wage will reduce the number of jobs in the economy, nor even in a sector of it…So, what we want to do is isolate out a sector that we know is disproportionately affected by the minimum wage. That’s obviously the restaurant business.
Later on in 2015 Worstall goes back to this restaurant argument, pretending that this was his initial claim:
My prediction was much milder: We will see fewer restaurant jobs in Seattle as a result of this higher minimum wage.
The problem with this newfound restaurant argument should be very obvious: he never actually said anything about the restaurant industry in his touchstone article. Instead, we were unequivocally told that Seattle would see “reasonably large unemployment effects” writ large—not just in the restaurant industry.
His original prediction was in no way mild. It was broad. To suggest otherwise shows that Worstall either forgot the details of his argument in April 2014 or he blatantly added new qualifications to fit his ideological predilections.
And as my colleague Goldy pointed out, “the restaurant industry actually employs about 25% of Seattle’s minimum wage workers” not 50% like Worstall claimed.
But wouldn’t you know, Worstall’s alternative prediction didn’t come true either! Seattle restaurants simply did not lose jobs like the blogger predicted. Even though he “gleefully leapt on the story about restaurant closures in Seattle” (yes, he actually said that)—his attempts to paint Seattle’s restaurant industry in a negative light didn’t resemble the reality on the ground.
As a another Forbes blogger pointed out earlier this year:
…it looks like a higher minimum wage, at least at the $13 level in Seattle, hasn’t hurt the continued historical availability of restaurant work.
But job growth in Seattle wasn’t restricted to the restaurant industry alone. From mid-2014 to the end of 2015, “Seattle’s job growth rate tripled the national average.” That’s right: tripled.
And at the end of 2016, the unemployment rate in Seattle—“the tip of the spear” when it came to Worstall’s 2014 prediction—“has now hit a new cycle low of 3.4%.”
I think it’s fair to say this is not the way Worstall would have wanted things to go. These findings clearly undermined his initial (and subsequent) predictions. So what would you do if you were him?
I guess you could fall back on a rather cunning argument that didn’t appear in your original synopsis and “claim that growth would have been higher without the addition” of a higher minimum wage. Coincidentally, this newly added condition is really hard to disprove. And wouldn’t you know, in the face of Seattle’s great economic news he did just that in July of 2016! Observe how he backtracks and provides fewer and fewer specifics:
…of course the effects of a minimum wage are going to be marginal when laid against all the other things that can happen to a labor market.
No one at all has ever doubted that it is possible to increase employment and the minimum wage at the same time. The impact of the general economy is usually going to be larger than the impact of the minimum wage.
Interesting. I don’t remember him arguing about the marginal nature of the minimum wage in 2014. Or that one can raise the minimum wage and increase employment at the same time.
He made it sound like Seattle’s minimum wage policy was kind of consequential.
So to equivocate and say “we would be better off if we didn’t do that thing” is a little inexact and hypothetical. It’s like telling someone that they will get diabetes if they drink Coke, and then later saying, well, if you drink Coke you’ll have a higher chance of getting diabetes than if you don’t.
I openly admit that in time, we may look back and see the minimum wage’s “palpable impact on the existing…rate of job growth in the [Seattle] restaurant area.” But until then, Worstall’s most recent projection is merely “some theoretical and unmeasurable possibility.”
However, even if that day arrives—that was never a part of Worstall’s original argument! When you claim that “it’s not difficult to outline some of the effects that this new $15 an hour minimum wage in Seattle is going to have” — you better back that claim up with some compelling evidence.
The fact is: he hasn’t been able to, and in order to stop himself from gorging humble pie, he has created a whack-a-mole strategy of defending his free-market intuitions.
So to recap, in three years Tim Worstall has fearlessly predicted:
- Seattle’s minimum wage increase would lead to a rise in unemployment. (June 2014—4.5% unemployment rate)
- The unemployment effects from the minimum wage would be found primarily in the restaurant industry. (April 2015— 3.3% unemployment rate)
- The effects of the minimum wage are marginal and hard to extrapolate from the city’s economic performance. (July 2016—4.1% unemployment rate)
That, ladies and gentleman, is a tragic descent from confident specificity to slippery ambiguity.
Look, disagreements and arguments over the $15 minimum wage are necessary and welcomed. Every policy idea, no matter its noble intentions, should be subject to rigorous debate. I do have an issue, though, when individuals brag about the ease of predicting the future, only to adjust their predictions when the future doesn’t go as they expected.
It’s even worse when you consider that Worstall’s opinions are the primary source for many others when writing about Seattle’s minimum wage. His devious methods are not harmless; they have real-world consequences and shapes people’s judgments.
If he just abandoned the pompous posturing, he could actually make room for some stimulating economic dialogue. But Worstall won’t even admit that he has manipulated his original predictions to fit his own preconceived conclusion.
That is a shame and only goes to show that he is not merely someone who “has opinions about economics.” He is a charlatan.