Remember the warnings of economic disaster when Seattle’s minimum wage was raised to $15-16 an hour? Mark J. Perry is at the forefront of this (erroneous) paper. I’m teaching Contemporary Public Affairs this semester, and I was moved to return to this debate.
Here are two numbers to remind you of what happened.
figure 1: Seattle’s Schedule 1 (dark blue), Schedule 2 (tan) and federal (green) hourly minimum wages. NBER-defined recession peak-to-trough dates appear gray. source: Bureau of Labor Statisticsand seattle cityNBER and the author’s calculations..
figure 2: Seattle’s 2020 minimum wages are Schedule 1 (dark blue), Schedule 2 (tan) and federal (green). NBER-defined recession peak-to-trough dates appear gray. source: Bureau of Labor StatisticsBureau of Labor Statistics, seattle cityNBER, and author’s calculations.
Seattle raised its minimum wage to $11 in 2015 and $13 in 2016. We conduct two supplementary analyzes of its impact using administrative data from Washington state. Relative to the outlying areas of the state identified by the combined control method, total employment with wages less than twice the original minimum wage (measured in total hours worked) declined. Part of this reduction reflects a shift in wages for jobs above the threshold; the overall analysis may overstate the employment impact. A longitudinal analysis of workers in Seattle versus those in remote areas shows no change in the likelihood of remaining employed, but significant reductions in hours worked, particularly for less experienced workers. Job turnover fell, as did the hiring of new workers for low-wage jobs. The analysis shows that the total employment elasticity ranges from -0.2 to -2.0, is concentrated at the intensive margin in the short run, and is largest among inexperienced workers.
Previous article on this topic, here.