Study Shows $15 Minimum Wage Makes Workers Poorer — Are You Surprised?
A study on the increasing minimum wage in Seattle, Wash., found that the low-income workers in the city actually have been losing an average of $125 per month since the hike went into effect.
Seattle has been gradually increasing the minimum wage for workers in the city for years hoping to get to $15 per hour, but a working paper published Monday by the National Bureau of Economic Research shows that wage increases have already had a negative effect on the very people they were supposed to help.
The city raised the minimum wage from $9.47 to $11 per hour in 2015, then to $13 per hour in 2016. That second wage increase cut low-wage worker hours by an average of 9 percent, the study found, confirming many fears that employers would have to cut hours to be able to afford the rising labor costs.
“Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016,” the group of economists at University of Washington wrote in the study.
The study could overturn decades of conventional wisdom that said the benefits of raising the minimum wage outweigh the costs, the Washington Post reports.
“My view of the research is that [the minimum wage] seems to work,” Ben Zipperer, an economist at pro-minimum wage Economic Policy Institute, told WaPo. “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.”
The new study takes a different approach from past research which suggested that the minimum wage had little to no effect on the number of work hours. However, many of those studies looked at whole industries, where many workers made more than the minimum wage.
The University of Washington economists took a different approach: They examined what happens to the hours of minimum wage workers when the wage increases. Those low-wage workers saw a 9 percent decrease in hours, even as the minimum wage increased by 3 percent to $13 per hour in Seattle.
“That’s really a step beyond what essentially any past studies of the minimum wage have been able to use,” Jeffrey Clemens, an economist at the University of California, San Diego, told WaPo.