A new study by the University of Washington has found Seattle's increase of its minimum wage to $13 an hour, part of a planned hike to $15, has left low-wage workers worse off.
The study found the increase led to reduced employment for those workers and cut hours for those who kept their jobs. That undid the effects of the higher wages.
"The lost income associated with the hours reductions exceeds the gain associated with the net wage increase of 3.1 percent .... [W]e compute that the average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6 percent), which is sizable for a low-wage worker," the study concluded.
The report, released Monday, is a blow to movement for a higher minimum, which has adopted a $15 rate as its goal and has repeatedly argued that there is no evidence that it would hurt low-wage workers. The movement gained considerable steam in just a few years with the governors of California and New York signing bills last year phasing in a $15 rate. The Democratic Party adopted it as part of its official platform in 2016.
The study was conducted by researchers for the University of Washington's Daniel J. Evans School of Public Policy and Governance and was commissioned by the city of Seattle when it passed an ordinance in 2014 putting the city's minimum wage at $15, phasing it in over a period of years. The city rate increased to $13 an hour at the beginning of last year.
Critics of the movement seized on the report.
"The report shows there is little to celebrate for many of Seattle's employers and employees," said Michael Saltsman, spokesman for the conservative Employment Policies Institute.
Proponents of the movement argue that the study was flawed, noting it is out of line with earlier studies.
"One initial indicator of these problems is that the estimated employment losses in the Seattle study lie far outside even those generally suggested by mainstream critics of the minimum wage," wrote Ben Zipperer and John Schmitt in an analysis for the liberal Economic Policy Institute.
A study by the university last year analyzing the phase-in's increase to $11 an hour found that the city's low-wage workers were slightly better off overall but that this was due to the region's booming economy, not the higher minimum wage. The increase causes the city's low-wage workers to lag behind similar workers in neighboring regions, the study found.
The new study shows the recent phase-in had a more direct effect, finding employers not only reduced the number of low-wage jobs, but also reduced the hours of retained employees. That hurt the workers' bottom lines.
"Estimates suggest payroll declines of 4 percent to 7.6 percent (averaging 5.8 percent) during the second phase-in period. This implies that the minimum wage increase to $13 from the baseline level of $9.47 reduced income paid to low-wage employees of single-location Seattle businesses by roughly $120 million on an annual basis," the study stated.
It added that this effect was likely to become more severe as the minimum rate gets higher.
"There is good reason to believe that increasing the minimum wage above some level is likely to cause greater employment losses than increases at lower levels," the study stated.