Seattle min wage hike - early evidence is in - does not raise earnings by much because workers end up with fewer hours

[Axulus]

 In a region where all low-wage workers, including those in Seattle, have enjoyed access
to more jobs and more hours, Seattle’s low-wage workers show some preliminary signs
of lagging behind similar workers in comparison regions.

 The minimum wage appears to have slightly reduced the employment rate of
low-wage workers by about one percentage point. It appears that the Minimum
Wage Ordinance modestly held back Seattle’s employment of low-wage workers
relative to the level we could have expected.

 Hours worked among low-wage Seattle workers have lagged behind regional
trends, by roughly four hours per quarter (nineteen minutes per week), on
average.

 Low-wage individuals working in Seattle when the ordinance passed transitioned
to jobs outside Seattle at an elevated rate compared to historical patterns.

https://evans.uw.edu/sites/default/files/MinWageReport-July2016_Final.pdf

I'm willing to let the evidence tell me the story, and on many economic issues, it takes time for the evidence to accumulate. As more cities raise minimum wage, the picture will clarify. But the early evidence from Seattle is that a higher minimum wage at the city level doesn't raise total earnings by much, because low-skilled workers end up with fewer hours on the job.

http://conversableeconomist.blogspot.com/2016/08/higher-local-minimum-wages-early.html

 

[ksen]

Hold on, the sky didn't fall?

I'll take 19 minutes less a week over the sky falling any day.

 

[laughing dog]

According to the cited study, the earnings of Seattle's minimum wage workers went up. And their hours worked and employment went up (just by less than surrounding areas used in the comparison). Seems to me it is a bit of a success for minimum wage workers in Seattle.

 

[Axulus]

According to the cited study, the earnings of Seattle's minimum wage workers went up. And their hours worked and employment went up (just by less than surrounding areas used in the comparison). Seems to me it is a bit of a success for minimum wage workers in Seattle.

The hours worked and employment may be going up because there is an economic boom in Seattle, but it is being accompanied by a housing and rental market that is increasing at the fastest rate in the nation - meaning that their cost of living is going up at a high clip. On the whole, the benefit appears to be minor (in comparison to the surrounding areas not affected by the law). Additionally, there is a high likelihood that the price of low skilled labor is more elastic over longer time-frames as businesses get additional time to adapt to the changes and new labor savings technology gets developed (incentivized even more by the greater potential cost savings the minimum wage creates), further diminishing the benefits to the workers (and possibly eliminating them).

 

[Valjean]

No surprise here. Key word: "early."
Minimum wage hikes initially depress the economy slightly, then equilibrate and finally result in a general economic improvement.

 

[Loren Pechtel]

Hold on, the sky didn't fall?

I'll take 19 minutes less a week over the sky falling any day.

You're missing the number that now work outside the area--the only reason that would happen is if they got laid off/fired.

 

[laughing dog]

According to the cited study, the earnings of Seattle's minimum wage workers went up. And their hours worked and employment went up (just by less than surrounding areas used in the comparison). Seems to me it is a bit of a success for minimum wage workers in Seattle.

The hours worked and employment may be going up because there is an economic boom in Seattle, but it is being accompanied by a housing and rental market that is increasing at the fastest rate in the nation - meaning that their cost of living is going up at a high clip. On the whole, the benefit appears to be minor (in comparison to the surrounding areas not affected by the law). Additionally, there is a high likelihood that the price of low skilled labor is more elastic over longer time-frames as businesses get additional time to adapt to the changes and new labor savings technology gets developed (incentivized even more by the greater potential cost savings the minimum wage creates), further diminishing the benefits to the workers (and possibly eliminating them).

Your cited article (not mine) indicates that the early indications are the MW benefited the MW workers. You can come up with reasons why that may not hold in the long run, but it is an empirical question. As of right now, your OP indicates that the MW hike benefited low wage workers - a result that many people who claim to have taken ECON 101 also claim is impossible.

 

[ksen]

Hold on, the sky didn't fall?

I'll take 19 minutes less a week over the sky falling any day.

You're missing the number that now work outside the area--the only reason that would happen is if they got laid off/fired.

And what number is that?

 

[whichphilosophy]

I'm not sure how this would work, but when I started working in the Oil and Gas industry on a contract basis, the wages were very good. When HR departments set in minimum wages, it really was to push the wages of the higher persons down. I wonder if this is happening where a minimum wage is applicable.

 

[bilby]

Hold on, the sky didn't fall?

I'll take 19 minutes less a week over the sky falling any day.

You're missing the number that now work outside the area--the only reason that would happen is if they got laid off/fired.

Funny - I have moved to different areas to work on a very large number of occasions; But have only been laid off or fired a couple of times. Once I even moved half-way around the world, without having been laid off or fired - I quit my job on my own terms.

It's almost as if your suggestion that "the only reason that would happen is if they got laid off/fired" was total bollocks.

 

[bleubird]

Why is it that people that whine the most about minimum wage are upper middle class.Can you not afford a bit more so the person that is feeding you makes a living wage? ASSHOLES!

 

[Canard DuJour]

Ho hum, yet another "study" totally failing to find any unemployment caused by MW, and so resorting to speculation about how much more employment there would have been otherwise. And yet another author who doesn't get that a reduction in working hours for the same or more money is, in and of itself, beneficial to the worker.

The only revealing thing about them is the volume and frequency with which they're churned out. Their purpose, I imagine, is to allow third parties in the rightwing echo chamber to say "Yeah, there was a study done in Seattle recently, showed minimum wage caused unemployment."

 

[bigfield]

The only revealing thing about them is the volume and frequency with which they're churned out. Their purpose, I imagine, is to allow third parties in the rightwing echo chamber to say "Yeah, there was a study done in Seattle recently, showed minimum wage caused unemployment."

The raison d'être of think tanks.

 

[Medicine Man]

https://evans.uw.edu/sites/default/files/MinWageReport-July2016_Final.pdf

I'm willing to let the evidence tell me the story, and on many economic issues, it takes time for the evidence to accumulate. As more cities raise minimum wage, the picture will clarify. But the early evidence from Seattle is that a higher minimum wage at the city level doesn't raise total earnings by much, because low-skilled workers end up with fewer hours on the job.

http://conversableeconomist.blogspot.com/2016/08/higher-local-minimum-wages-early.html

Hold on, the sky didn't fall?​

Seeing-as-how The University of Washington jumped-the-gun, regarding the data (required)....to make a fair evaluation...."conservatives" are still hopeful the "sky" is short-timing.​

July 29, 2016 - "The debate over the Seattle experiment has generated more heat than light to this point.

A new report from Jacob Vigdor and his colleagues at the University of Washington attempts to shed some light on the effects of the first incremental stage of the increase. They use data from the state’s Employment Security Department from when the law was passed through the fourth quarter of 2015, at which point the minimum wage stood at $11 per hour. This does not include the second stage of increases that took place January 1, 2016, or the further increases that will eventually bring it to $15 per hour and much higher thereafter. The early results show the mixed effects of the first incremental increase, there does not appear to be much evidence of firms being driven out of business, and some low-wage workers have seen their hourly wage increase, it also reduced the employment rate and hours, with the end result for these low-wage workers being “ambiguous and likely fairly small.”

The report only analyzes the first initial stage of the scheduled minimum wage increases, as the authors note and as illustrated in Figure 1. In addition, due to the timing of the study, it can only capture the short-run effects of this first incremental increase. As such, this analysis cannot provide insight into the impact of future additional increases to the minimum wage or what the longer-run effects might be."

http://www.cato.org/blog/seattles-m...ng-yet-ambiguous-effects-low-wage-workers-due​

 

[whichphilosophy]

Why is it that people that whine the most about minimum wage are upper middle class.Can you not afford a bit more so the person that is feeding you makes a living wage? ASSHOLES!

One could call such people an ignoramars which means an ignorant person who is also an asshole.

 

[Loren Pechtel]

You're missing the number that now work outside the area--the only reason that would happen is if they got laid off/fired.

Funny - I have moved to different areas to work on a very large number of occasions; But have only been laid off or fired a couple of times. Once I even moved half-way around the world, without having been laid off or fired - I quit my job on my own terms.

It's almost as if your suggestion that "the only reason that would happen is if they got laid off/fired" was total bollocks.

People don't willingly take jobs in lower paying areas while continuing to live at the same location.

- - - Updated - - -

Why is it that people that whine the most about minimum wage are upper middle class.Can you not afford a bit more so the person that is feeding you makes a living wage? ASSHOLES!

We understand the world isn't that simple.

Raise the minimum wage and some make more--but some make much, much less because they don't have a job at all. Furthermore, in the long term it just leads to inflation that puts the wages back where they were. (And if you index it you lock into law an inflationary spiral.)

Just because an idea has some good points doesn't automatically make it something we should do.

 

[Trausti]

We understand the world isn't that simple.

Raise the minimum wage and some make more--but some make much, much less because they don't have a job at all. Furthermore, in the long term it just leads to inflation that puts the wages back where they were. (And if you index it you lock into law an inflationary spiral.)

Just because an idea has some good points doesn't automatically make it something we should do.

That's the policy question. Do we let set the minimum wage at a level which permits the greatest number of people to enter the job market and gain experience, or do we set it so that a smaller subset of unskilled/low skilled labor gets a higher than market wage leaving the larger remainder unemployed? I think the former is the better choice; but the "eat the rich" crowd is blinded to unintended consequences.

 

[Horatio Parker]

Raising wages when an output gap exists isn't inflationary. IOW not if there's sufficient supply to absorb the extra purchasing power. Which has been the case for quite a while.

But what's always missing from the neoliberal inflation alarms is that asset appreciation is inflationary, but for some reason left out of the calculations.

It's all about who benefits.

 

[bilby]

Funny - I have moved to different areas to work on a very large number of occasions; But have only been laid off or fired a couple of times. Once I even moved half-way around the world, without having been laid off or fired - I quit my job on my own terms.

It's almost as if your suggestion that "the only reason that would happen is if they got laid off/fired" was total bollocks.

People don't willingly take jobs in lower paying areas while continuing to live at the same location.

This is nonsense. People don't willingly take lower paying jobs while continuing to have the same expenses and hours; but knowing what area someone works in tells you nothing about their pay, their hours nor their expenses.

You are trying to force your conclusion on data that cannot support it; you are indulging in a category error.

Who ever turned down a well paid job because it was in a low paying area?

 

[Loren Pechtel]

We understand the world isn't that simple.

Raise the minimum wage and some make more--but some make much, much less because they don't have a job at all. Furthermore, in the long term it just leads to inflation that puts the wages back where they were. (And if you index it you lock into law an inflationary spiral.)

Just because an idea has some good points doesn't automatically make it something we should do.

That's the policy question. Do we let set the minimum wage at a level which permits the greatest number of people to enter the job market and gain experience, or do we set it so that a smaller subset of unskilled/low skilled labor gets a higher than market wage leaving the larger remainder unemployed? I think the former is the better choice; but the "eat the rich" crowd is blinded to unintended consequences.

Yup, it's a fundamental philosophical issue.

However, there's another factor here: Last I saw data only 1% of employees made minimum wage. (And another 2% were below minimum wage--but that is tipped jobs. Many of those 2% would actually be making considerably more.)

If it were the same 1% at the bottom all the time it would be reasonable to try to raise it. However, that's not reality. Rather, most people who take a minimum wage job do so for a fairly short period of time before moving up the ladder. Also, minimum wage jobs aren't always that bad a thing. I worked a minimum wage job in college--and it was actually a very good thing. I was able to schedule things so probably 90% of my time was in the unpopular hours in a lab that didn't see all that much use--in that lab 90% of my job was simply to be there. (They didn't want something like $100k in equipment just sitting there with no eyeballs on it. My job description didn't include knowing anything beyond the absolute basics about the computers. Sometimes I went far beyond the minimum but so what?) I had to be there as scheduled but from a practical standpoint I was being paid to be in a room and do my schoolwork.