In 2014, the City of Seattle announced plans to gradually raise its minimum wage to $15 dollars an hour, one of the highest rates of any major city in the U.S. The news prompted cheers from some and predictions of doom from others. Given that the law kicked in gradually, only now can we begin to understand what happened as a result of raising wages over several years.
A new study published in American Economic Journal: Economic Policy examines what happened in Seattle and compared the results to a “Synthetic Seattle,” which modeled employment conditions had the law never been enacted. The results of Seattle hiking its minimum wage are complex and will provide plenty of fuel for other policy debates.
While data only existed for the minimum wage hikes in 2015 and 2016 ($11 and $13, respectively), the data was able to paint quite a picture. The State of Washington measures hours worked when calculating unemployment benefits rather than days like most other states. This benefited the authors of the study, as the effect of raising the minimum wage on employment could be measured with more precision.
In the short-term, the wage increases led to some businesses cutting back hours for their employees. Many of these hours were later restored. The overall earnings for those making less than $13 per hour did go up by as much as 21 percent, with no comparable increase in the rest of Washington State. Wages and overall earnings for all jobs...
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