Editor’s note: This is a continuing discussion of the minimum wage issue.
As different cities and states across the country experiment with raising the minimum wage to different heights, Seattle has been heralded as “a national guinea pig for the policy since 2014,” according to a report in CNN, when the city voted in 2014 to gradually raise its minimum wage from $9.47 to $15.45 for large employers by 2018 and to $16 per hour in 2019.
Studies show that “low-wage workers made more money despite getting fewer hours — but that experienced workers made out the best,” according to the CNN report.
But the increases workers earned wouldn’t send anyone over the moon.
According to a study conducted by economists at the University of Washington, lower-paid workers earned $10 more per week on average through 2016, even while reducing weekly hours slightly, while more experienced workers made $19 more per week. That extra $9 per week, however, was attributed to those employees working more hours at second jobs outside the city.
One benefit of the higher minimum wage, however, was that employee turnover decreased, partly because employers tried harder to keep valued employees. “That’s a plus for existing workers,” the CNN report said, “but potentially an obstacle for inexperienced or new workers trying to get that first line on their resume.”
On the down side, however, the study showed that fewer new workers entered Seattle’s low-wage labor market compared to the rest of Washington. According to the CNN report, the study’s authors concluded: “Seattle’s minimum wage ordinance appears to have delivered higher pay to experienced workers at the cost of reduced opportunity for the inexperienced.” (https://cnn.it/2KJODeB)
Other studies take issue with some of those findings, which is par for the course. Liberal-leaning studies and conservative-leaning studies seem to be able to arrive at different conclusions, based on the desired outcome, but the prevalent view appears to be that raising the minimum wage by modest amounts over the years does not negatively affect job growth. As the CNN report noted: “A different study released last month by the Institute for Research on Labor and Employment at the University of California at Berkeley showed no employment loss in six cities that had raised wages above $10 by 2016 — Seattle, San Francisco, Chicago, Washington D.C., Oakland and San Jose. Rather, that study found that average weekly earnings for workers in the food service industry went up between 1.3% and 2.5% for every 10% increase in the minimum wage.”
An important caveat, however, is that these cities (and the studies about them) were all in high growth areas with booming economies. What happens when the economy turns south, or what might happen in a rural area with weaker growth is an open question.
In another study by the Congressional Budget Office, the authors argued that the “overall pool of wages earned by workers is a better metric by which to judge minimum wage increases,” not the potential loss of a few jobs.
In that study, according to the Economic Policy Institute, the CBO “estimated that raising the minimum wage from $7.25 to $10.10 would have increased the hourly wages of 17 million workers by 14.5 percent, prompting employers to reduce employment by 500,000, or 2.9 percent of those directly affected workers. If these employment declines were spread out over the entire group—if all 17 million lost some hours but no workers were out of work for an entire year—all affected workers would be better off, working a little less (2.9 percent fewer hours) but enjoying an annual income increase of 11.6 percent.” (https://bit.ly/2WDOQqR)
For those readers following this discussion and wanting to participate in an hour-long group discussion, join us next Wednesday at 9:30 a.m. at Vermont Coffee’s Café on Exchange Street, Middlebury. We’ll continue to outline the issue at Wednesday’s meeting, and then meet two weeks later to discussion potential solutions. Visit the Addison Independent’s Facebook page and group for a continuing conversation.
Angelo Lynn