Thread: What Seattle learned from having the highest minimum wage in the country

Laboratories of democracy: what Seattle learned from having the highest minimum wage in the nation

The city adopted a $15 minimum wage four years ago. Here’s what happened.

By Matthew Zeitlin Updated Jul 22, 2019, 9:07am EDT




Looking at the nation’s most intriguing experiments in local policy.

The policy: $15 minimum wage

Where: Seattle, Washington

In place since: 2015

The problem:

A Taco Bell in the Ballard neighborhood of Seattle shut down a couple hours early in the spring of 2013. All three employees and one off-shift worker walked off the job to protest low wages and work conditions. One of them was Caroline Durocher, a 21-year-old Taco Bell employee, who said the decision was “easy.”

“What we’re getting right now isn’t fair and not right,” she told the Stranger, in reference to her wage of $9.19 an hour, then the city-wide minimum wage. “It’s easy to not think about the person serving you your food.” The very next day, a Burger King, two Subways, and a Chipotle all shut down after employees continued to walk out.

Durocher was part of a nationwide wave of labor activism among the traditionally scattered and disorganized fast-food workforce, made up of largely low-wage workers at the mercy of fast-food franchise owners who set their schedules and pay.

The walkouts would eventually help lead to Seattle passing a historic policy that continues to serve as an example to politicians and researchers to this day.

Seattle’s minimum wage hike, which would jack up wages to $15 an hour by 2017 for companies with more than 500 employees, was passed five years ago by the City Council. By 2021, at which time the $15 wage would be phased in for all employers, it would be the highest minimum wage in the country, well north of Washington’s already relatively high wage of just over $9. “Worker voices and folks taking to the street shifted the conversation about it and made the policy feasible,” Rachel Lauter, the executive director of Working Washington, an activist group that helped organize the protests, said.

Today, Seattle’s wage is at $16 for large employers, and $15 for all other employers (unless they provide a certain level of medical benefits or employee tips, which allows them to knock it down to $12 an hour). It remains one of the highest in the country, and a useful case study as we head into a presidential election where a higher minimum wage has become the standard policy position for Democratic candidates.

At the time the Seattle bill was passed, the federal minimum wage had stagnated at $7.25 since 2009, where it still is today.

While minimum wage increases are generally popular with voters, they also tend to kick up extreme opposition from business owners, who warn of massive job losses and killing off new businesses. It’s one reason why the minimum wage has stayed so low nationally.

Seattle was a natural place for this progressive policy to pass. It is both a very wealthy city with fairly liberal politics — ranging from socially liberal business people to a democratic socialist on the city council — and a high level of union penetration and a history of disruptive labor activism that goes back to its 1919 general strike. But the bill faced a fair share of opposition. Employers, like restaurant owners, raised the alarm that the new wage would force them to close businesses, raise prices, fire workers, or move their businesses outside of the city limits.

When the policy went into effect in 2015, Seattle’s minimum wage became not only the highest in the nation, but likely the most studied. A group of researchers at the University of Washington, with support from philanthropic groups, have been examining the effects of the wage increase on workers’ hours and take-home pay as well as business closures and the price of some goods like groceries.

What the researchers have found over the last few years is quite a mixed story.

How it worked:

Policymakers are still looking at Seattle as a case study in how a high minimum wage could actually work in practice. The results are complex. But here’s what happened.

Generally, those business owners who threatened to leave Seattle to evade the new wage haven’t been following through.

“The restaurant industry moans and groans about minimum wage increase, but the Seattle newspaper every month has a story about 40 new restaurants opening,” said Jennifer Romich, a University of Washington social policy researcher. (According to the Bureau of Labor Statistics, the number of jobs in restaurants and bars in the Seattle area has grown from 134,000 to 158,000 since 2015.)

Surveying employers, Romich and other researchers found the most common response to the wage increase was to raise prices or fiddle with workers’ hours, and a “very small percentage were thinking about withdrawing or leaving the city.”

The story for employees is much more varied. The minimum wage for some large employers jumped from $11 to $13 from 2015 to 2016. The economists observed the impact of the hike in 2017 and found it had dramatic effects on the low-wage workforce and employment.

Not all of them were good. They found that the policy “reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent ... consequently, total payroll for such jobs decreased.” That means the total amount that employers paid to workers was less with the new minimum wage in place than projected payroll if the policy hadn’t gone into effect.

The data, researcher Mark C. Long explained, suggested a “tipping point” between $11 and $13 “when it becomes less tenable to keep work in the city.” (Critics were quick to point out that this likely wasn’t solely due to the minimum wage policy — Seattle’s labor market continued to heat up during that period, reducing the number of low-wage jobs compared to high-wage jobs overall.)

But a year later, the team published another paper that complicated their findings. They looked at the same time period and same wage increase, but this time broke down the actual take-home pay of workers. They found that workers who were already employed at the low end of the wage scale in Seattle “enjoyed significantly more rapid hourly wage growth,” following wage increases in 2015 and 2016.

Those who were already working more hours before the wage increase saw “essentially all of the earnings increases,” while the workers who had fewer hours saw their hours go down, but wages go up enough so that their overall earnings didn’t really change. They theorized that a slowdown in new hiring for low-wage jobs could explain their earlier findings that overall payroll had gone down.

Ultimately, workers already employed either saw their take-home pay go up or stay roughly the same while working fewer hours.

Critics of the UW researchers have seized on Seattle’s uniqueness to discount the UW findings. Ben Zipperer of the liberal Economic Policy Institute wrote that the UW research is based on a “flawed comparison” between Seattle and the rest of the state. He argued that the decline in low wage jobs was due to a hot economy boosting low-wage jobs into high-wage jobs,
not the new minimum wage. The data did show, Zipperer argued, that all of the workers they studied were “better off after the minimum wage increase” — higher-hour workers earned more with a higher wage while the low-hour workers got the same pay for less work.

There are still questions about the policy’s impact that are harder to observe, such as new employees who may or may not have been hired had the minimum wage been lower. And of course, the question of whether this would work in any other city remains. “I take this research as a cautionary tale for other cities like Seattle,” Long said, noting that Seattle’s booming labor market, especially at the high end and in technology, “is a very particular thing.”

What all sides would agree on is that the people advocating for a higher minimum wage — those among the already employed like Caroline Durocher who went on strike six years ago — were right to do so.

https://www.vox.com/the-highlight/20...age-15-dollars

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