Seattle is one of the main areas where the minimum wage is being raised.
Since doing so, businesses have laid off workers, employee hours were cut, people were replaced by technology and prices went up. On top of that, some workers even requested fewer hours because they made too much and didn’t qualify any longer for subsidized housing and food stamps.
Now there’s a report by Bloomberg, which shows that the minimum wage in Seattle isn’t going so great…to put it lightly.
Apparently people are getting paid a higher wage, but earnings aren’t rising because hours are being cut.
People who made less than $11 an hour before the law took effect saw, on average, a slight bump in their paycheck of around $72 every three months. The median number of hours worked fell by about four hours a quarter.
This was predicted by many and the effects are starting to reveal itself. This is what happens when wages are hiked up.
If you can make slightly more money by working slightly fewer hours, who wouldn’t take that deal? The trouble is that this is the average effect. If the cutbacks in hours worked are “lumpy” — if some people saw big reductions, while others saw little or none — then the people whose hours were reduced a lot could well be worse off, while the people who got the wage hikes and the same number of hours might be substantially better off. This is particularly true if one of those “lumps” consists of people who become unemployed entirely. Which it seems to.
According to the study, the share of those low-wage workers who were still employed after the law took effect fell by 1.2 percent. That’s not Great Depression-level unemployment by any means. And some of it could consist of people who would, say, rather be home with their kids, and who no longer need to work because their partner just got a substantial raise thanks to Seattle’s higher minimum wage. However: 1.2 percent is not nothing. And given that it’s not really all that easy to support a family on $11 an hour in Seattle, I’m pretty skeptical that this represents a lot of voluntary unemployment. There’s also evidence that about 3 percent of previous workers had to look for work outside the city of Seattle.