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Mon Jun 26, 2017, 11:59 AM

Seattles Minimum Wage Hike May Have Gone Too Far

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Source: Five Thirty Eight

As cities across the country pushed their minimum wages to untested heights in recent years, some economists began to ask: How high is too high?

Seattle, with its highest-in-the-country minimum wage,1 may have hit that limit.

In January 2016, Seattle’s minimum wage jumped from $11 an hour to $13 for large employers, the second big increase in less than a year. New research released Monday by a team of economists at the University of Washington suggests the wage hike may have come at a significant cost: The increase led to steep declines in employment for low-wage workers, and a drop in hours for those who kept their jobs. Crucially, the negative impact of lost jobs and hours more than offset the benefits of higher wages — on average, low-wage workers earned $125 per month less because of the higher wage, a small but significant decline.

“The goal of this policy was to deliver higher incomes to people who were struggling to make ends meet in the city,” said Jacob Vigdor, a University of Washington economist who was one of the study’s authors. “You’ve got to watch out because at some point you run the risk of harming the people you set out to help.”

Read more: https://fivethirtyeight.com/features/seattles-minimum-wage-hike-may-have-gone-too-far/



This contradicts what I've heard anecdotally, but thought I'd post it here.

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 12:02 PM

1. we need to address obscene CEO compensation packages at the D.C. level

then just maybe employee pay will rise.

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 12:06 PM

2. I have said it before the way to really get companies to improve wages is via the tax system

and make it so the businesses are rewarded with lower taxes provided at least 90% of their their employees earn x% over the poverty level.

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 12:14 PM

3. So the companies are spending LESS on wages than before?

If the "negative impact" is more than the extra money from increased wages, that means that the companies are spending LESS on wages than before. They are not just making necessary business decisions to cut back enough to make their wage costs stay the same. Temper tantrum, maybe?

Second, even though that may have been too much too soon. But generally, my thoughts are that if a business can't afford to pay a living wage to a full time worker, then is that business really a viable, successful business? Or is it getting by on the backs of low-paid workers in combination with welfare benefits those "employees" are eligible for because of their low wages.

That's a trick that WalMart perfected. Pay low wages so that you push other local businesses out of business, since all people will shop for lowest cost items. Then let the workers claim welfare benefits like food stamps and Medicaid, thus funding your own business costs! Nifty!

I am sympathetic with small businesses, but my understanding is that these min. wage laws don't apply to small businesses. A small business is a totally different thing from a large corporation. A worker doesn't get paid much by a small business, and there are usually no benefits. So if someone has a troubled work history, you might choose to work for a small business, or there may be a more flexible work schedule, or it may be close to home so you can walk or ride a bike there.

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Response to Honeycombe8 (Reply #3)

Mon Jun 26, 2017, 12:17 PM

4. Seattle's law does apply to small businesses. It applies to all businesses. n/t

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Response to pnwmom (Reply #4)

Mon Jun 26, 2017, 01:16 PM

11. Yikes. That's rough. But then...Seattle has a very high cost of living. So $15/hr isn't as much

So $15/hr isn't as much there as it is other places, like Louisiana or Alabama.

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Response to Honeycombe8 (Reply #3)

Mon Jun 26, 2017, 12:32 PM

6. When you hear an ad on the radio around here for, example, McDonalds, there's always a disclaimer

at the end of the pricing section that 'prices may be higher inside the City of Seattle'.

For this reason.

Businesses are likely working both sides of the equation; tightening the span of labor hours/headcount AND raising prices.

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 12:31 PM

5. May be good for cities to start estimating jobs to be lost to automation over net ten years

so we can begin some planning on income needed by humans.

Pressure to set minimum wages and living wage seem to indicate underlying problems with an economy.

Fast food industry customers are probably low income and lower middle income earners. So they pay more for this service but their own paychecks may not be growing to cover it. Meanwhile automation and robotization is like a runaway train speeding towards us.

I note that there are already conferences being held in universities and professional circles on guaranteed individual incomes.

How nice it would be to meet the future instead of having it creep up on us, as so often seems to be the case.

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 12:35 PM

7. Not so fast-

That article is citing the same study that was discussed in the Washington Post this morning- here :



A quote from the more substantial Wapo article:

"Experts cautioned that the effects of the minimum wage may vary according to the industries dominant in the cities where they are implemented along with overall economic conditions in the country as a whole.

And critics of the research pointed out what they saw as serious shortcomings. In particular, to avoid confusing establishments that were subject to the minimum with those that were not, the authors did not include large employers with locations both inside and outside of Seattle in their calculations. Skeptics argued that omission could explain the unusual results.

"Like, whoa, what? Where did you get this?" asked Ben Zipperer, an economist at the left-leaning Economic Policy Institute (EPI) in Washington. "My view of the research is that it seems to work," he said. "The minimum wage in general seems to do exactly what it’s intended to do, and that’s to raise wages for low-wage workers, with little negative consequence in terms of job loss."


Read more here:
https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-study-casts-doubt-on-whether-a15-minimum-wage-really-helps-workers/?utm_term=.d3374099f113


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Response to Calista241 (Original post)

Mon Jun 26, 2017, 12:37 PM

8. The latest RW lie

Statistics can be used to obscure many things. This is a good case.

There was an increase in workers making MORE than the min wage in Seattle, and a decrease in workers making min wage. All with a incredibly low unemployment rate.

The Oligarchs will stop at nothing to keep the people in poverty.

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 12:58 PM

9. people paid about 25 cents a minute work more efficiently, they work harder to keep the good job.

IMO, $15 an hour should be base pay across the lands.

Employers are free to pay contract wages if they don't want to pay hourly wage with minimum benefits.

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 01:02 PM

10. The way to raise wages is to make it easier to unionize .

That's what FDR did. It created the booming middle class as we all see it now in our rear view mirrors thank to Reagan and the Republican Party

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Response to Calista241 (Original post)

Mon Jun 26, 2017, 01:19 PM

12. Locking...

The consensus of Forum Hosts agrees this is analysis, not LBN. Please post this in the General Discussions Forum.

From the SOP of the LBN Forum:

Post the latest news from reputable mainstream news websites and blogs. Important news of national interest only. No analysis or opinion pieces. No duplicates. News stories must have been published within the last 12 hours. Use the published title of the story as the title of the discussion thread.

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