Politics & Policies

Seattle’s $15 minimum wage – The negative employment effects

Recall, we’re not insisting that a rise in the minimum wage will reduce the number of jobs in the economy, nor even in a sector of it. We’re saying that once we isolate out only the effect of the minimum wage rise then we will see that there are fewer jobs as a result of it than there would have been without it. We entirely agree that the effects of the general economy can overcome this minimum wage effect.

So, what we want to do is isolate out a sector that we know is disproportionately affected by the minimum wage. That’s obviously the restaurant business. As is not quite accurately but generally true some 50% of minimum or below wage earners work in this sector and some 50% or so of workers in this sector are on minimum wage or below. It’s a good place to go looking for the effects of the minimum wage.

We’d also like to look at a place which has this higher minimum wage as opposed to pretty similar places that don’t. That will help us isolate out that effect of the minimum wage rise. So, let’s compare Seattle to areas that aren’t quite Seattle, and compare the restaurant industry in both places. It’s not perfect, nothing ever is in these sorts of statistics. But it is also the best we’re going to get. Industry near uniquely exposed to the minimum wage, in a place with the higher minimum and nearby areas without it.

Capture d’écran 2015-08-11 à 09.03.39

Which is what Mark Perry does for us:

The chart above shows that the Emerald City MSA started experiencing a decline in restaurant employment around the first of the year (when the state minimum wage increased to $9.47 per hour, the highest state minimum wage in the country), and the 1,300 job loss between January and June is the largest decline over that period since 2009 during the Great Recession (data here). The loss of 1,000 restaurant jobs in May following the minimum wage increase in April was the largest one month job decline since a 1,300 drop in January 2009, again during the Great Recession. In contrast to the January-June loss  of restaurant jobs in the Seattle area: a) restaurant employment nationally increased by 130,700 jobs (and by 1.2%) during that same period (data here), b) overall employment in the Seattle MSA increased 1.2% and by 21,800 jobs (data here) and c)non-Seattle MSA restaurant employment in Washington increased 3.2% and by 2,800 jobs.

Chosen excerpts by Job Market Monitor. Read the whole story at Seattle’s $15 An Hour: Measure The Unemployment Effects And There They Are – Forbes.

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