Seattle's minimum-wage increase made the most vulnerable workers poorer


Seattle's minimum-wage increase made the most vulnerable workers poorer

However, it is deemed credible and detailed by economists and was contracted by the same city that mandated the hike in minimum wage.

A new report out Monday morning shows minimum wage workers in Seattle may be making more money, but the number of jobs available are shrinking.

The law also cost the city 5,000 jobs, the report said. Overall though, this is further evidence, adding to an already large literature, suggesting raising the minimum wage to high levels has a very high cost indeed and that the competitive model of the labor market holds.

Many cities around the US are pushing for their minimum wages to almost double, but what kind of impact will it have on the economy, jobs, and the public at large?

She said the minimum wage increase takes extra administrative work, but she hasn't had to cut back anyone's hours. But the Seattle study's results suggest small-scale employers can't-or won't-pay low-skill workers enough to survive. Prior elasticity estimates in the range from zero to -0.2 suggest there are few suitable substitutes for low-wage employees, that firms faced with labor cost increases have little option but to raise their wage bill. However, it is the low-skill and poor who will feel the effect first and foremost, and who will find it much more hard to acquire the job skills needed to raise the value of their labor to or above the minimum wage.

Not quite. Actually, according to a recently released study from University of California at Berkeley, there was no discernible reduction in job numbers in the food service industry. Large employers would be required to hike minimum wages by $1 per year until 2022.

By chance, another study of Seattle's $15 minimum wage has just come out.

But liberal groups are criticizing the Washington study's methodology. Many variables affect what a company pays workers and in a healthy economy those effects are less pronounced. And led politicians, labor advocates, and pundits to conclude that negligible employment effects from small wage increases meant big increases would work, too. The City Council backed the wage increase. Other low wage jobs would possibly be eliminated altogether, ending up hurting most those workers SB81 was passed to help. Moreover, the authors in the study said that if their results are correct, their research begs the question - how much of a minimum wage is beneficial to the economy? The tax credit can make up the difference, and keeps people employed.

But in Seattle, low-wage worker earnings were flat.

"In too many ways, and for too many people, our incredible successes are also creating two Seattles", as former USA attorney and Seattle mayoral candidate, Jenny Durkan, put it.

"This strikes me as a study that is likely to influence people", said David Autor, an economist at the Massachusetts Institute of Technology who was not involved in the research.

The effects of a higher minimum wage have been hotly debated since the 1990s.



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