Seattle Times: Seattle’s Workers, Businesses Doing Well with a Higher Minimum Wage

All eyes have been on Seattle since we began phasing in a $15 minimum wage, waiting to see if the sky would fall, as opponents claimed it would.

Instead, we’ve seen the floor rise — workers and families are doing better, our economy is growing and there’s been no massive closure of businesses. And the news keeps getting better.

The University of Washington team studying the results of the minimum wage last week quantified that success: Workers are getting paid more, we’ve added jobs, and new businesses continue to open their doors in Seattle.

The new study found that “Seattle’s labor market is in great shape,” with job growth triple the national average. It found that the first step in the increase, which went into effect April 1, 2015, and raised wages from $9.47 to $10 for workers at small businesses and to $11 at large businesses, meant low-wage workers brought home more in quarterly wages — raises that would translate into more than a 20 percent increase in their annual wages.

Of course, the biggest increases were those for workers earning less than $11 to start with, but there were also modest wage increases for those making up to $18 an hour — which helps demonstrate the point that when we raise the floor, all of us do better.

The study covered the first of several gradual wage increases, and compared these results to two other scenarios. Compared to “business as usual” over several years, low-wage workers’ wages increased by $1.32 per hour, employment increased by 2.6 percent, and workers got an increase in hours.

Opponents might try to characterize these increases as marginal. But for workers and families living on the margins, these increases make a meaningful difference in their day-to-day lives. They also make a difference for small businesses in our community, because when low-wage workers have more money to spend, they spend it in local businesses. That, in turn, boosts our economy. Business owners like Molly Moon Neitzel, founder and owner of Molly Moon’s Homemade Ice Cream, have said that when minimum wages go up, more families are able to come into their businesses, and their profits go up, too.

Neitzel’s experience was echoed by the UW report, which found that more businesses in Seattle have opened since the wage increase went into effect. A previous study by the UW found no evidence of price increases in Seattle across all retail sectors as the result of the minimum wage increase.

These results should not be surprising: Since the early 1990s, economists have conducted scores of studies of the impact of minimum wage increases. The Seattle findings mirror results of the most rigorous research examining hundreds of case studies of local and state minimum-wage increases. These studies conclude that raising the minimum wage boosts incomes for low-paid workers, and that businesses are able to absorb the cost of paying higher wages without reducing employment through a range of options, including savings from increased employee productivity and reductions in employee turnover that consistently result from minimum wage increases. In fact, according to the U.S. Department of Labor, states that raised their minimum wages in 2014 saw faster job growth than states that left their wages stagnant.

To be sure, the UW researchers attempted a comparison of what did happen with what could have happened as a result of our astounding growth rate. To do this, they came up with a model which they called “Synthetic Seattle,” cobbled together from ZIP codes across the state where they felt the job growth rate mirrored Seattle’s.

The problem with this methodology is that if a winery opened in an Eastern Washington town and brought some good paying jobs, that ZIP code may have been included. But other than those winery jobs, the economy in that town looks nothing like the real Seattle’s. Regardless, some opponents of the minimum wage may cling to the idea that in this “Synthetic Seattle,” things could have grown even more than they did in real life.

The reality in Seattle only tells a story of growth — better wages, more jobs and more businesses. And that’s the story that really matters.

For a family relying on minimum-wage jobs, more money every week means less having to choose between paying the rent or buying groceries.

For a business owner, workers in the communities around you making more money means more customers and more business on Main Street.

We’re still watching the impacts in Seattle, and in other cities and states that have raised their wages. But so far the signs point in the same direction: more workers, and families and businesses that have the opportunity to thrive, together.

Rebecca Smith is deputy director of the National Employment Law Project. Misha Werschkul is executive director of the Washington State Budget & Policy Center.

Read the original op-ed at the Seattle Times.


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About the Authors

Rebecca Smith

Director of Work Structures, National Employment Law Project

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