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[b][center][big]Should the Government Increase the Minimum Wage?[/big][/center][/b]

[b][u]A new study says the $13 wage is a killer for lower-wage workers.[/u][/b]

Some laws of economics are so obvious that they require hundreds of papers to prove, and a classic example is the minimum wage, which increases the cost of labor and in most cases prices some workers out of jobs. F[b]resh evidence comes from Seattle’s minimum-wage climb to a $15 an hour.[/b]

A study from researchers at the University of Washington published in the National Bureau of Economic Research looked at how Seattle’s minimum-wage increase in 2016 to $13 an hour from $11 affected low-wage workers. The results? Hours worked fell 9%—3.5 million hours a quarter—and low-wage employees lost $125 a month on average.

Let that sink in: A campaign predicated on giving workers a raise lowered paychecks. The increase to $13 from $11 also “yielded more substantial disemployment effects” than an earlier jump to $11 from $9.47, the study found.

Note that Seattle’s minimum will continue to rise to $15, with varying deadlines for small and large businesses. Later increases will almost certainly be more damaging, as businesses try to absorb costs by automating more tasks or raising prices for consumers. As for workers, some may even ask for reduced hours: Benefits like Medicaid phase out as income rises, which means a worker’s next dollar of income can be taxed above 100%.

The labor unions underwriting the Fight for $15 campaign have activated the phone trees to impugn the study’s credibility. Proponents of the increase point to a report released last week from the University of California-Berkeley that purported to find no adverse effects from Seattle’s move. Yet the Washington study relied on sophisticated and detailed data about hours and earning, while Berkeley deployed the restaurant industry as a proxy.

One political subplot: Last week wage and employment expert Michael Saltsman wondered why Seattle Mayor Ed Murray’s office was pumping the Berkeley report when the city had commissioned its own studies from the Washington researchers. According to reporting in the Seattle Weekly, the mayor’s office knew the damning report was coming. Berkeley scholars were offered an advance copy to rebut the claims. This looks more like coordinating press releases than honestly addressing the Seattle evidence.

Other attempts to avoid reality include complaints that the study did not adequately control for Seattle’s booming labor market, which liberals say is displacing low-wage jobs for better opportunities. The study did include a control, and this is the tension for the left: Wages are growing so fast in Seattle that the government needs to intervene to increase them?

Still another progressive impulse is to say that perhaps $15 an hour is too disruptive to the labor market, but with more data the government can pinpoint the precise wage that benefits workers. That would certainly raise the demand for labor consultants and Berkeley professors, if not for waiters. The real and eternal lesson is that political wage-setting hurts the least skilled and lowest-paid workers, as the evidence in Seattle shows.
26-30, F
4 replies
Jun 30, 2017
FloorGenAdm · 46-50, M
I guess it just stinks no matter how you slice it.
westwiiler · 46-50, M
Minimum wage is the bare minimum. $15 per hour is a decent wage. Granted someone working $15 ph may need a second job, but minimum was never meant to be lived on.....if we employers are forced into $15 per hour, we will be forced into more automation and few employees.l
bigjohndl · 61-69, M
$15 per hour minimum wage also displaces workers who were already at $15 and now expect more money. The businesses they work at now have to react with more automation and or fewer employees as they will not be able to meet higher wages.

The businesses that this affect the most are restaurants and retail stores. Both of them have seen a downturn in business due to the likes of Amazon and large online retailers. A $15 per hour minimum puts the death sentence on businesses that are just just getting buy. You just need to read the news to see all of the retailers that are closing stores.
Northwest · 56-60, M
The New York Times, beat the WSJ to this story, by several days. The NYT piece is better researched and presented.

The "control" used by the UW study, is not a real control, but a virtual one, created by the software. I live in the Seattle area. My son was working for a high end Pizza joint, while in college. He's now a financial analyst, working for a restaurant chain, and a few weeks ago, we were discussing the minimum wage issue and how it affected the industry.

He said that it had no impact on his company, because the job market in the Seattle area, not the law, is forcing the issue, and they're expecting to go higher than the legal minimum wage, to keep employees who would otherwise find other jobs.

The UW is struggling, trying to figure out why its English and Marketing Communications grads, cannot find jobs outside of Starbucks.
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