A new study has suggested that the city’s gradual wage increases are not going as planned.
An FKD Feature exclusive

According to a new study, Seattle’s low-wage workers are losing around $125 a month to the city’s minimum wage hike.

The study

Three years ago, Seattle officials voted to incrementally boost the city’s minimum wage to $15 an hour. Though the decision seemed to be a win for low-income workers, a new study conducted by a group of economists at the University of Washington has shown the opposite.

The paper, published on Monday, used state records of wages and hours for individual employees. Researchers tracked the effects of the wage increase in all industries, focusing especially on the changes in hours worked.

The study showed that Seattle employers haven’t been able to keep up with the rising wage. This has forced employers to implement payroll and hour cuts, put off new hiring and even lay off more workers.

Though workers are making more per hour, they are also facing scheduling cuts, causing the estimated $125 monthly loss.

Along with pay cuts, employers have been looking to hire more skilled and experienced workers, since they are now paying higher wages. This has negative implications for less skilled workers since entry-level jobs are becoming more competitive.

The new UW study strongly suggests that the benefits of an increased minimum wage are being overshadowed by larger negative effects, but not everyone agrees.

Criticisms

Though these problems may be real, it is important to remember that the research is relatively new and has not been peer reviewed.

While the Washington Post’s headline called the research “very credible,” Fortune cited that the data excludes 40 percent of the Seattle workforce.

The study did not include data from large employers with locations both inside and outside of Seattle, such as McDonald’s and Best Buy, as researchers wanted to avoid accidentally including establishments that weren’t subject to the new minimum. This could’ve led to inaccurate results or skewed data, as some critics are suggesting.

The University of California — Berkeley, also published a similar study last week. The UC Berkeley study found results that match those of past research, asserting that minimum wage increases are ultimately beneficial for both workers and employers.

UW’s study also could indicate something positive. The negative data showed a loss in low-income work, but that isn’t necessarily a bad thing. The shifts in Seattle’s labor force could merely indicate that more people are getting raises and finding better jobs as a result of the city’s booming economy.

Takeaway: Raising the minimum wage is a complex process

The UW study raises valid concerns, but implementing a wage increase isn’t simple. Many factors will fluctuate as the city tries out this new wage, and a bad report doesn’t mean it’s time to scrap the whole project.

Over time the data will become clearer, but there isn’t enough research yet to conclude whether an increased minimum wage is helping or hurting low-wage workers.

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Header image: Getty Images

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Posted 07.11.2017 - 11:56 am EDT