The Unit of Caring

I’ve been trying to sort through the competing perspectives on Seattle’s minimum wage hike for the last week. 

Seattle raised their minimum wage is stages, to $11 and then to $13 and coming up soon to $15/hour. They commissioned a study from the University of Washington, which would have access to an extraordinarily rich corpus of data from all across Washington State, to examine the effects of the minimum wage increase. When the minimum wage went up to $11, the effects were nothing to write home about for either side of the debate - the study found that the average low-wage worker brought home about $75/month more but that low-wage employment seems to have been depressed slightly. (So, it was a little harder to find a job, but if you found one you’d bring home some extra money.) Since this wasn’t very exciting it didn’t attract much attention, and to my knowledge no concerns were raised about the study methodology at that time.

The $13/hour minimum wage, according to the researchers, was harmful to low-wage workers. When word got out that that’s the direction their research was pointing, the city stopped funding them, instead commissioned a different study using different methodology from UC Berkeley, pressured UC Berkeley to publish their results a week before the results from the University of Washington study, and then publicized/promoted those results (which found no effect on employment in the restaurant sector). 

Then the University of Washington study came out. It found that the average low-wage worker took home $125 less per paycheck as a result of the minimum wage increase, because for every 1% increase in the minimum wage hours were cut by 3%. So you’d earn slightly more per hour but get your hours cut way back. Like UC Berkeley they found no effect in the restaurant sector, but they found dramatic effects in most other low-wage sectors.

This time, lots of concerns have been raised about the University of Washington study methodology. Obviously, since these were not raised when the first leg of the study came out, they’re partially motivated by the desire to refute the findings. On the other hand, that doesn’t make them wrong. People have expressed concerned that they accounted insufficiently for nationwide trends in the retail industry, which might have resulted in cuts to hours even without the minimum wage hike (they accounted for Seattle in comparison to other Washington cities, but if there’s some reason to expect large cities to move differently from small ones and Seattle to be in a reference class different than the rest of the state, this wouldn’t have been fully accounted for.) They take issue with the framing in comparison to ‘a Seattle that didn’t raise the minimum wage’, which is of course something we can’t really know about. And the methodology does not account for people getting part-time employment in industries that their data does not track, like ridesharing or sex work or informal childcare, or getting jobs outside the city. 

My impression is that the result is pretty robust, and that these factors change the details but not the overall picture, which is that when you raise the minimum wage to $13/hour companies cut positions and cut hours, and low-wage workers bring home less money than before. If this is true, the effects when Seattle hikes to $15 will be even more pronounced and harder to explain away, and we’ll have a more definitive answer.

• 2 July 2017
• #minimum wage
• 209