The minimum wage increases in Seattle over the past several years have actually resulted in less hours worked for the poorest workers, resulting in less overall pay, according to a study by University of Washington researchers published by the National Bureau of Economic Research.
The Seattle Minimum Wage Ordinance raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016. While the first wage increase had modest effects, researchers say the second wage increase 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.
“Employment losses associated with Seattle’s mandated wage increases are in fact large enough to have resulted in net reductions in payroll expenses -- and total employee earnings -- in the low-wage job market,” the researchers write. “There is good reason to believe that increasing the minimum wage above some level is likely to cause greater employment losses than increases at lower levels.”
The researchers say their conclusions contrast with earlier studies because the latter focused on lower-wage industries, such as the restaurant sector, or on lower-productivity employees such as teenagers.
However, the current study examined the impact of a minimum wage increase for employment across all categories of low-wage employees, spanning all industries and worker demographics. Moreover, the current study also examined total employee headcount, and not total hours worked.
There are several caveats to the study, the researchers write, including that smaller single-site employers were over-represented in the sample. “Though survey evidence indicates that multi-site employers were if anything more likely to report staffing reductions in the wake of the minimum wage increase.”
However, the researchers write that any minimum wage increase at the state or federal level may reduce such actions by multi-site employers.
“It is reasonable to expect that policies implemented at a broader geographic scale offer fewer opportunities to reallocate employment in response,” they write.
HR Dive says another study by University of California, Berkeley researchers show a $15 minimum wage increase fully implemented by 2023 will likely have little effect on jobs. However, HR Dive writes the manufacturing sector was not a major aspect of this study, and so the impact of automation on low-wage manufacturing jobs was not measured.
In the analysis of the University of Washington study, HR Dive agrees with the researchers that wage increase laws could result in employers replacing low-wage workers with higher-skilled workers -- at the same time that increased automation of certain low-wage, low-skill jobs would leave jobs that require a level of interpersonal skills.
“More importantly: Automation will likely come about regardless of how wages change,” HR Dive writes.
Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.
Your access to unlimited BenefitsPRO content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking benefits news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical converage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
Katie Kuehner-Hebert
Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.
