Although Americans have been finding jobs and getting hired in greater numbers recently—the economy picked up 220,000 jobs last month alone—wages have remained stagnant, which has pushed discussions of the minimum wage front and center. Potential increases to the minimum wage were a hotly-debated topic during the 2016 election, and in fact, a number of cities have actually mandated $15 minimum wages within their borders. Advocates of the minimum wage see these increases as a tremendous step forward, but a recent study calls into question just how much minimum wage increases benefit workers.
A team of economists from the University of Washington analyzed the effects of minimum wage increases in Seattle; they found that the city’s low-wage workers lost, on average, $125 a month as result of the higher minimum wage. This study contradicts years of research on the minimum wage that indicated the benefits of increases for workers outweigh the costs.
Using data collected by the State of Washington that tracks hours worked and payroll records for all employees statewide, the study noted that Seattle workers who earned less than $19 an hour, classified as low-wage workers, saw their hours fall by an average of 9% between 2014-2016 after the city initiated a series of minimum wage hikes. The overall number of low-wage jobs also decreased by nearly 7% during the same period. Ultimately, these findings suggest the potential benefits of increasing the minimum wage will be negated by subsequent job losses or reduced hours.
Many economists have criticized the study for a series of methodological problems: The data that the researchers used is not publically available and did not include information on workers in the “contract” economy as well as fast-food or retain chains, for example. Other experts said that studying large increases to the minimum wage in a city with a strong economy like Seattle, which already had an unusually low rate of unemployment and high wages, may have led the researchers to draw conclusions that are inaccurate or cannot be applied to the nation at large.
The study comes as cause for concern for supporters of a higher minimum wage, but the one thing that economists and politicians on both sides of the issue can agree on is that this will not be the last word on the minimum wage.
To read the full study on minimum wage increases in Seattle, click here.