Seattle Minimum Wage
Words cannot describe the torment experienced by the data before they confessed what the University of Washington team got them to confess. I can only urge readers with an open mind to study Table 3 carefully. The average wage increase, from the second quarter of 2014 to the third quarter of 2016, for all employees of single site establishments was 18 percent. Eighteen percent! That is an annual increase of almost 8 percent. For two and a quarter years in a row. Not bad. And the number of hours worked of ALL employees of single site establishments? Up 18 percent in a little over two years. That too is an increase of almost 8 percent per annum.
Now multiply that wage by those hours and the total payroll for all employees rose 39.5 percent over the course of nine quarters. An annual rate of increase of 17.5 percent. These are BIG numbers. They are freaking HUGE numbers.
It must have taken a team of at least six academics to extract a 9.4 percent decline in hours from the 86,842 workers (out of a total of 336,517) earning under $19 dollars an hour at these single-site establishments. Look at the Table and weep.
Now, as I mentioned in a comment on Peter’s post, bracket creep alone could do away with at least 7 percent of the missing hours of workers earning under $19 and hour. That is unless we assume that everyone making between about $18 and $19 got approximately zero wage increases while the rest of the crew were getting 10 percent raises. Look at the God damned table. This isn’t rocket science.
Minimum Wage Increases, Wages, and Low Wage Employment: Evidence from Seattle
Sandwichman:
Who is the “it?”
The data. Fixed “it”.
ttps://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers
Do you have a link to the paper?
Thanks, Dan. I have now added it to the post.
https://evans.uw.edu/sites/default/files/NBER%20Working%20Paper.pdf
Sandwichman:
Another for your collection: Seattle Times; Where Do You Stand on Seattle’s Minimum Wage
Copy of the paper:
https://evans.uw.edu/sites/default/files/NBER%20Working%20Paper.pdf
I had the same conclusion after reading over table 3. The authors do nothing to control for a change in the wage paid for lower-skilled jobs. If wages are rising rapidly, of course fewer people are going to be making less than some arbitrary nominal threshold. That’s a good thing for low-income workers, not a bad one!
http://www.nber.org/papers/w23532
This is the working paper. Not yet peer reviewed. $5 purchase option. I was able to obtain a copy using email address from my alma-mater.
$80,000 Seattle median household income. Little wonder a min wage raise did little to dampen demand.
“If wages are rising rapidly, of course fewer people are going to be making less than some arbitrary nominal threshold. That’s a good thing for low-income workers, not a bad one!”
Great point! Lower wage workers have been (virtually) defined out of a job — they didn’t pass the goal line; the goal line passed them.
Wanna do a bottom up study of min wage effects? When is somebody going to do a survey of affected workers — before and after. What they think about the whole situation is what should count (likely infinitely more realistic).
Unions. Collective bargaining will leave all questions to the free market — we wont have to argue or study.
Simply horrible. They fix the definition of “low wage,” which is changing based on the increase in the Minimum Wage. In the reducto ad absurdum, they could have set “low-wage” to be those making less than $13 per hour, and shown that the increased Minimum Wage eliminated ALL those jobs.
As I see it, the only proper way to do such a study is to look at the people at the bottom of the wage pool before the increase, both in Seattle and in all of Washington, and see how those individuals fared. Did they fare better or worse in Seattle than in the state as a whole?
The paper also tries to make a case for not using teen employment as a “canary.” It is not a convincing case.
I’m patting myself on the back for taking a huge grain of salt with the Berkeley results the other week (not here, but elsewhere), because now I can nod sagely and do the same again.
I moved back to Seattle last year, after 8 or 9 years away, and its absolutely white-hot economically again. It feels like the 2000 dot-com bubble, but even more. As a customer you can just feel how lower end retail is starting to scrape the bottom of the barrel for employees.
Rents and other costs are shooting up as well. The 30 or 40 or whatever large construction cranes you see working, every one of those is over an entire block where every previously existing single-site retail business is no longer, and a lot of them are moving a long way or just closing forever. There is a pretty big problem, imo, in that the new buildings that are built tend not to rent to those small local businesses. High up front costs, long leases. Its easier for chains, apparently.
Its a very unusual situation. Its going to stress these studies badly.
Now that I’ve actually looked at the table it is a sure case of bracket creep.
Throw in 3.1% unemployment — and you wonder if some economists are like weathermen who don’t look outside the window.
https://www.google.com/search?q=seattle+unemployment+rate&ie=utf-8&oe=utf-8
JUST EMAILED THIS TO SEATTLE MAYOR, CITY COUNCILPERSONS AND THEIR ASSISTANTS AND SEATTLE TIMES JOURNALISTS:
Seattle’s supposedly “anti” minimum wage raise study seems only to record raging bracket creep — in an exploding economy.
Under $13/hr jobs dropped 17,000 — under $19/hr jobs (includes under $13/hr) dropped only 6,000 (cumulatively) — all jobs increased 44,000 …
… at 3.1% unemployment …
https://www.google.com/search?q=seattle+unemployment+rate&ie=utf-8&oe=utf-8
… with $80,000 median household income …
http://www.seattletimes.com/seattle-news/data/80000-median-wage-income-gain-in-seattle-far-outpaces-other-cities/
… and anecdotal reports of 20-30 cranes building downtown and of difficulties finding low-skilled workers for retail positions.
Some economists, like some weather forecasters, would do well to open a window and look outside.
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http://angrybearblog.strategydemo.com/2017/06/seattle-minimum-wage.html
(may have to click on “open remote content” to view chart)
PASTED CHART HERE