Revisiting $15/hr. Minimum Wage - Does it Work?
Dec 26, 2016 13:59:04 #
A while back, we discussed the minimum wage hikes in Seattle and used it to paint a picture of how the rest of the country might fare under a similar law. The outlook was not good, but the amount of data at our disposal was pretty limited.
Now that the city has been under hikes for almost two years, and because another hike is scheduled for January 1, it’s worth revisiting the statistics to see if our previous assessment holds true.
November Jobs Report
If you recall, the November Jobs Report for the U.S. showed that the Trump Bump was helping the entire country. A specific review of the state of Washington and Seattle area can shed light on how Trump’s impact has weighed against the minimum wage hikes in the city. To start with, Seattle is enjoying record low unemployment, and by and large the Trump Bump is raining money on the masses.
It looks like the minimum wage didn’t hurt at all . . . until we look at the data that matters: retail and restaurants. In November, the Seattle area saw a net nonfarm job increase of 3,600. Jobs that employ the bottom quintile earners, namely retail and restaurants, saw a net job loss of 1,200 and 3,100 positions respectively.
If you also note that November is far and away the biggest retail hiring month of the year, these numbers aren’t just bad; they’re devastating. Even more damning are the numbers for the whole state of Washington. If Seattle is excluded, then the state added 3.100 jobs in the food industry. Seattle’s loss is so extreme, that it puts the entire state in the hole by another 3,000 jobs in that industry.
The Trump Bump was unable to reach this marginalized group, and the rate of job loss is accelerating, despite statewide and national booms.
Long-Term Trends
November’s findings were nothing new. Food industry jobs have been in decline in the region since 2015 (when the first stage of the minimum wage hike went into effect), and despite desperate attempts by proponents of the wage to deny it, there is now an undeniable trend.
Many wage supporters will claim that the decline in restaurant jobs predates the minimum wage, but that simply isn’t true. From 2011 to the start of 2015, the Seattle region added 25,000 jobs in the industry, and 5,000 of them were added in 2014 alone. That rate slightly exceeded the rest of Washington, and it far exceeded national averages.
Since the wage hike went into effect, Washington has added another 10,000 jobs, while Seattle has seen a net loss. No matter how you try to spin it, the trend shifts correlate perfectly with the wage hike, and the statistics from the rest of the state eliminate other regional or temporary factors.
Whereas early reports were showing that the wage hike was a wash for wage earners, downward trends have now held long enough to make the overall impact detrimental. Bottom earners in Seattle are now bringing in less money overall than they were before the wage hike. But, that’s not even the worst part.
A Perspective on Data
All of these statistics have one thing in common. They do not separate the City of Seattle from the rest of the metropolitan area. Bellevue and Everett have not instituted the same wage increases, so there is disparity in measurement.
In order to better separate the data, it must be made clear that Seattle only accounts for 25 percent of the total population of the greater metro area. While there is less reliable data for job rates in each distinct city, most reports suggest that restaurants outside of the minimum wage zone have not slowed hiring.
That means that the situation within Seattle is substantially worse than the impressions you’ve had up to this point. Job losses for minimum wage earners are so extreme that they are causing a negative report for an area three times larger than the region that is actually suffering. To put this in context, consider this analogy:
Suppose we took four students and averaged their grades. The top three students in the group all have A’s, but the fourth student is failing. In fact, the fourth student’s grade is so low that it brings the group’s average below passing. Assuming a standard grading scale, if the three A students each have a 90 percent, then the failing student would actually require a negative score to bring them all down so far. Minimum wage earners in Seattle aren’t facing a setback. They are facing annihilation.
Regards,
Ethan Warrick
Editor
Wealth Authority
Now that the city has been under hikes for almost two years, and because another hike is scheduled for January 1, it’s worth revisiting the statistics to see if our previous assessment holds true.
November Jobs Report
If you recall, the November Jobs Report for the U.S. showed that the Trump Bump was helping the entire country. A specific review of the state of Washington and Seattle area can shed light on how Trump’s impact has weighed against the minimum wage hikes in the city. To start with, Seattle is enjoying record low unemployment, and by and large the Trump Bump is raining money on the masses.
It looks like the minimum wage didn’t hurt at all . . . until we look at the data that matters: retail and restaurants. In November, the Seattle area saw a net nonfarm job increase of 3,600. Jobs that employ the bottom quintile earners, namely retail and restaurants, saw a net job loss of 1,200 and 3,100 positions respectively.
If you also note that November is far and away the biggest retail hiring month of the year, these numbers aren’t just bad; they’re devastating. Even more damning are the numbers for the whole state of Washington. If Seattle is excluded, then the state added 3.100 jobs in the food industry. Seattle’s loss is so extreme, that it puts the entire state in the hole by another 3,000 jobs in that industry.
The Trump Bump was unable to reach this marginalized group, and the rate of job loss is accelerating, despite statewide and national booms.
Long-Term Trends
November’s findings were nothing new. Food industry jobs have been in decline in the region since 2015 (when the first stage of the minimum wage hike went into effect), and despite desperate attempts by proponents of the wage to deny it, there is now an undeniable trend.
Many wage supporters will claim that the decline in restaurant jobs predates the minimum wage, but that simply isn’t true. From 2011 to the start of 2015, the Seattle region added 25,000 jobs in the industry, and 5,000 of them were added in 2014 alone. That rate slightly exceeded the rest of Washington, and it far exceeded national averages.
Since the wage hike went into effect, Washington has added another 10,000 jobs, while Seattle has seen a net loss. No matter how you try to spin it, the trend shifts correlate perfectly with the wage hike, and the statistics from the rest of the state eliminate other regional or temporary factors.
Whereas early reports were showing that the wage hike was a wash for wage earners, downward trends have now held long enough to make the overall impact detrimental. Bottom earners in Seattle are now bringing in less money overall than they were before the wage hike. But, that’s not even the worst part.
A Perspective on Data
All of these statistics have one thing in common. They do not separate the City of Seattle from the rest of the metropolitan area. Bellevue and Everett have not instituted the same wage increases, so there is disparity in measurement.
In order to better separate the data, it must be made clear that Seattle only accounts for 25 percent of the total population of the greater metro area. While there is less reliable data for job rates in each distinct city, most reports suggest that restaurants outside of the minimum wage zone have not slowed hiring.
That means that the situation within Seattle is substantially worse than the impressions you’ve had up to this point. Job losses for minimum wage earners are so extreme that they are causing a negative report for an area three times larger than the region that is actually suffering. To put this in context, consider this analogy:
Suppose we took four students and averaged their grades. The top three students in the group all have A’s, but the fourth student is failing. In fact, the fourth student’s grade is so low that it brings the group’s average below passing. Assuming a standard grading scale, if the three A students each have a 90 percent, then the failing student would actually require a negative score to bring them all down so far. Minimum wage earners in Seattle aren’t facing a setback. They are facing annihilation.
Regards,
Ethan Warrick
Editor
Wealth Authority
Dec 27, 2016 16:22:51 #
we would like to see a 6.oo dollar per hour minimum wage for teens only thru 19 years of age...this will teach teens to work , know schedules and rules, what it takes to buy gas for a car, to buy movie tickets, popcorn and a cola..and how much the government steels from them each paycheck to give to some one who doesn't have pride in themselves to get out and get a job...we in business watch the teens work when we are at there place of employment..may are hired away for better pay based on how well the serve in their current working establishment...let the teens work please..get out of the way..they are our future..this is the best classroom just a thought
Dec 28, 2016 03:20:38 #
mark medicus wrote:
we would like to see a 6.oo dollar per hour minimu... (show quote)
Interesting viewpoint, well expressed, but the issue here is not whether the minimum wage serves a purpose, but rather whether a $15/hr. minimum wage is workable. It appears that the warnings by the business community of the negative effects such a minimum wage would bring about were prophetic. Actually, no ESP was necessary to reach such a conclusion; just a little common sense understanding of how business works. The need to make minimum wages high enough to support a family, or to provide an independent lifestyle, are bastardizations of the intended purpose of what was originally known as a "minimum starting wage". What lazy or uninformed workers beginning at that level have not been informed is this: Until they learn to do MORE than they are being paid for, they will never be paid more than they are worth.
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