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Seattle’s Experiment With a $15 Minimum Wage

by Eric Lumpkins

In 2014, the city of Seattle decided to gradually increase its minimum wage to $15 an hour, over the course of several years. Researchers from the University of Washington, in a study partially commissioned by the city of Seattle, found serious negative effects on the earnings and hours worked for workers affected by that minimum wage increase.

Seattle first raised its minimum wage from $9.47 to $11 an hour in April 2015 and then to $13 an hour in January 2016. Some small businesses and larger ones such as health care providers faced only smaller increases.

What the Seattle study found was that during the second phase of the wage hike, from $11 to $13 an hour, the number of hours worked by low wage workers fell by 3.5 million per quarter. This was demonstrated both in thousands of job losses and reductions in hours worked by those that did keep their jobs.

While the minimum wage increase did result in higher wages, it also saw a notable reduction in the working hours of low-wage earners. Wages increased about 3 percent, but the number of hours worked by those in low-wage jobs dropped about 9 percent — a significant amount that led to a net loss of earnings on average.

The job losses and reduction in hours worked were so extreme that they led to “reduced income paid to low-wage employees of single-location Seattle businesses by roughly $120 million on an annual basis.” On average, low-wage workers lost $125 per month.

Although more studies and peer-reviewing should be done, this study is consistent with what many economists, including Nobel Prize-winning economist Milton Friedman, have said for decades. Minimum wage laws increase the price of labor, thus forcing businesses to economize and discriminate against lower-skilled workers.

Minimum wage laws do raise some workers’ wages, but only at the expense of other workers’ jobs. Usually, these other workers are poor, low-skilled, teens and minorities. As Professor Friedman once said: “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

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