Seattle's Minimum Wage Rise Is Reducing Employment In Seattle

We’ve been debating the effects of raising the minimum wage for some time now, and specifically there’s been a back and forth between myself and various acolytes of Nick Hanauer over what the minimum wage rise in Seattle will do to employment prospects there.

My claim was, by the standards of basic and conventional economics, entirely uncontroversial. A rise in the price of something will lead to people purchasing less of that thing. So a rise in the price of low-skill labor will lead to employers purchasing less of low-skill labor.

http://www.forbes.com/sites/timworstall/2016/07/26/seattles-minimum-wage-rise-is-reducing-employment-in-seattle-i-was-right-in-predicting-this/#23b2d9824e6c

well,hoodahThunkit?

the prices of so many things have risen over my lifetime but I doubt people spend money any less because of it

people pay based upon the value of a thing,, not the cost of it

Yeah, screw the facts

whose 'facts' should I believe?


http://www.seattletimes.com/seattle-news/politics/15-wage-has-little-impact-on-seattles-thriving-labor-market-report-suggests/

each side shares their 'facts' to support their position


I refer to my nearly fifty years of personal experience, of what people will buy and at what price

Until we get out from under the oppression of liberal policy on the economy raising the minimum wage is a job killer for teen and senior labor and the economy. Throw in the rising costs of Oblowme care and the exporting of American jobs under bad trade deals, tax, and regulation by this (and other) administrations and you have the perfect storm!

From that Seattle Times story:

"Seattle's experience shows that the city's low-wage workers did relatively well after the minimum wage increased, but largely because of the strong regional economy."

From the University of Washington's Seattle Minimum Wage Study:

"The distribution of wages shifted as expected. The share of workers earning less than $11 per hour declined sharply. This decline began shortly after the ordinance was passed. However, similar declines were seen outside of Seattle, suggesting an improving economy may be the cause of the change in the distribution of wages."

"In a region where all low-wage workers, including those in Seattle, have enjoyed access to more jobs and more hours, Seattle's low-wage workers show some preliminary signs of lagging behind similar workers in comparison regions.

The minimum wage appears to have slightly reduced the employment rate of low-wage workers by about one percentage point. It appears that the Minimum Wage Ordinance modestly held back Seattle's employment of low-wage workers relative to the level we could have expected.

Hours worked among low-wage Seattle workers have lagged behind regional trends, by roughly four hours per week, on average."

indeed, interesting correlations


not strong proof of cause though

http://fee.org/articles/low-skilled-workers-flee-the-minimum-wage/

Then perhaps you shouldn't cite that Seattle Times story, because it cites the same University of Washington study that I quoted.

I cited it because it had the opposite conclusion of the other story

that minimum wage increase reduces employment


minimum wage increases have happened over my lifetime and employment has wained and ebbed


a correlation doesn't prove a cause, and particularly a three month observation isn't conclusive of permanent or definitive effect

Yet the study that the newspaper cites says, "The minimum wage appears to have slightly reduced the employment rate of low-wage workers by about one percentage point. It appears that the Minimum Wage Ordinance modestly held back Seattle's employment of low-wage workers relative to the level we could have expected."

So, the conclusion is that Seattle's minimum wage law may have prevented people from getting entry-level jobs.

hhaa.. The same people that still believe in the " Trickle Down theory "

that it 'may' have is indisputable

it 'may' also be due to any number of other reasons that over a mere three months low wage employment decreased,, a nine month study may show something different,, a 12 month study something else


similar to how the study points out that the boon , which also correlates to wage reduction, is actually because of the economy itself

Economics 101
You have a hot dog stand with 2 employees. Each employee makes $5.00 an hour(fake minimum wage just for example sake), or $10.00 an hour labor cost.
Hot dogs cost $1.00 a piece wholesale so you have to sell 10 hot dogs an hour to break even on labor cost(doesn't include overhead like licenses, taxes etc.).
Now you have to pay those employees $10.00 an hour each, doubling your labor cost.
You have 2 choices, lay-off one and keep your hot dogs at the same price or keep both and double your hot dog prices making it more expensive to live.

Choice 1 increases the unemployment rate.
Choice 2 increases the cost of living for those living on retirement,welfare and social security or any fixed income.This really hurts the poor!

Both choices are bad for the economy. The free market will better reflect what people are willing to pay for a product and how much they are willing to earn for a job.

I don't think hot dog vendors are subject to min wage laws

hot dogs are abundant in supply and cheaper most places, so they have no VALUE that would justify the increased price


service, and its value,, is a bit different matter


lets say you employ ten people to go out and clean homes, you charge customers 50 bucks an hour and each employee works forty hours

that profits you 2000 per week per employee

if you have been paying them 10 hr or 400 a week, that leaves a 1600 profit per employee


so if you raise that to 12 hr or 480 a week, it leaves you still profiting and maybe cutting costs on retention that cover that 80 dollar a week loss


,,,,different than a hot dog

I don't think hot dog vendors are subject to min wage laws

hot dogs are abundant in supply and cheaper most places, so they have no VALUE that would justify the increased price


service, and its value,, is a bit different matter


lets say you employ ten people to go out and clean homes, you charge customers 50 bucks an hour and each employee works forty hours

that profits you 2000 per week per employee

if you have been paying them 10 hr or 400 a week, that leaves a 1600 profit per employee


so if you raise that to 12 hr or 480 a week, it leaves you still profiting and maybe cutting costs on retention that cover that 80 dollar a week loss


,,,,different than a hot dog

Employers are indeed subject to minimum wage laws.
Also, hot dogs have to be sold. If the cost of labor for sellers goes up, then there may be an incremental increase in the price of hot dogs.

everyone is not held to federal mimimum wage standards


The minimum wage law (the FLSA) applies to employees of enterprises that have annual gross volume of sales or business done of at least $500,000.


now, if that vendor with two employees is selling enough hot dogs to make that much yearly,, they probably should be getting paid more because they are working their proverbial behinds off...lol

First, it doesn't matter whether it is hot dogs, cars or the service industry.
Second, your example doesn't make any sense. If your paying 10 people $10.00 an hour,that is $100.00 an hour for your 10 employees, which you are only charging your customers $50.00 an hour for....you are now losing $50.00 an hour!

In any case you can not drastically increase your labor cost(in any industry!)without raising the price of the goods or services.