Advocates for Seattle’s higher minimum wages have succeeded at getting employees fewer hours, less money–costing them $125 per month.
[Updated with reactions, at bottom.]
After politicians artificially increased wages in Seattle, as they are in other parts of the nation as well, businesses who cannot increase prices to compensate for the artificially higher cost of wages, have had to look at other ways to reduce their costs.
As a result, a new study has found, many of the employees Seattle’s politicians tried to help with higher minimum wages have actually lost money by having their hours cut–to the point that the fewer hours are costing them an average of $125 per month!
According to the study:
This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.
“In other words, restaurants didn’t fire anybody,” the Daily Wire’s Ben Shapiro notes, “they just put them on part-time shifts and cut back their hours.”
It’s not a complicated problem: When prices go up, businesses look to either increase productivity or reduce costs.
Unfortunately, higher-wage advocates–like the Service Employees International Union’s #FightFor15 movement–have little understanding on how actual businesses work and, as a result have done more harm than good for many of Seattle’s “low wage” workers.
— TheAmericanWorkplace (@WorkPlaceRpt) June 26, 2017
If only there was a 250 year old empirical social science that could have predicted this astonishing resulthttps://t.co/y0PzuhS6jt
— David Burge (@iowahawkblog) June 26, 2017
Seattle's minimum wage hike (which I thought was a great idea) may actually have cost low-wage workers: https://t.co/iSC9AQb9WC
— Jill Filipovic (@JillFilipovic) June 26, 2017
— Capital Research (@capitalresearch) June 26, 2017