Low-wage workers who started out working more hours also saw the most benefit from an increasing Seattle minimum wage, while those working fewer hours saw little benefit, according to the latest study from University of Washington researchers.
More-experienced workers in Seattle’s low-wage labor market saw their paychecks rise with the city’s minimum-wage increases and stayed in jobs longer, while less-experienced workers, on average, saw little or no change.
That’s the latest finding from a team of University of Washington researchers, whose first study on Seattle’s minimum wage increases in 2017 concluded paychecks for low-wage workers on average were shrinking slightly because they were working fewer hours even as the pay floor rose from $11 to $13 an hour in 2016. That finding provided ammunition to opponents of the wage increases.
The new research, out Monday as a working paper published by the National Bureau of Economic Research, takes a finer-grained look at the labor market, reflecting its complexity and varied outcomes as the minimum-wage increases took effect. But critics say Seattle’s booming economy obscured the effects of the increases driven by the city’s wage-increase ordinance and called out other shortcomings in the analysis.
In the latest installment of the UW Minimum Wage Study, researchers followed more than 14,000 people employed in Seattle at a wage of $11 an hour or less at the beginning of 2015, before the wage increases. Looking at the same group about 18 months later, the researchers found that workers who started out working more hours — defined in the study as more-experienced workers — ended up earning on average $251 more per quarter. The less-experienced half of the group, which logged less than a third as many hours on the job each week at the beginning of the study period, averaged little or no change in income. That includes earnings anywhere in Washington, not just in Seattle.
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The research adds to a growing body of studies — each with their own methodological quirks and caveats — as more cities and states raise wages, and voters in Missouri and Arkansas consider increases on the ballot in November.
The UW study, which includes analysis of state data and interviews with employers and workers, suggests that employers expect a premium as a result of the mandated wage increases and are focusing on people who can provide it.
“Business owners are willing to pay higher wages, but one of the things they’re looking for is workers who can be productive from their first day on the job,” said Jacob Vigdor, who leads research on the Seattle minimum wage at the UW. “Inexperienced workers need more training. At higher wage levels, it’s less economical to provide that training on the job.”
A related trend is that workers are staying at their jobs longer, Vigdor said. Turnover declined 8 percent during the 18-month study period.
For low-wage workers with less experience — a high-school student looking for a summer job, say — the wage increases have led to fewer job opportunities, the researchers found.
Starting in 2015, Seattle saw a slower rate of new low-wage workers (those earning less than $15 an hour) entering the job market compared with Washington state outside of King County.
Critics of the UW team’s methodology point out that there are other forces driving differences between labor markets in Seattle and the rest of Washington besides the minimum-wage increases during the study period — namely, the rapid growth of the city and rising costs for just about everything.
“In reality, Seattle’s economic boom simply meant that low-wage jobs were converted into higher-wage jobs,” not that there are fewer job opportunities, wrote Ben Zipperer, an economist at the Economic Policy Institute, which focuses on the impacts on low- and middle-income people of a broad range of policies.
He pointed out other shortcomings, including the study’s omission of workers at businesses with more than one location, such as chain restaurants, because of limitations in the state employment data the UW used.
Vigdor said the split outcome in the latest version of the study — with more-experienced low-wage workers benefiting more than those new to the work force — mirrors the two common stories about low-wage work: that it’s a first rung on the ladder from which someone can move up, and that it’s a dead-end with little opportunity for advancement.
For those workers who are stuck in the low-wage part of the economy, Seattle’s minimum-wage ordinance appeared to be doing what it was designed to do, at least through its first stages.
“These are, in many respects, the workers who the minimum-wage increase was intended to help,” Vigdor said.
It will be harder still to assess the impact of Seattle wage increases that took effect in 2017 and at the beginning of this year, reaching as high as $15.45 an hour for some large employers.
Washington’s statewide minimum wage began an upward march in 2017 to $11 an hour and then $11.50 in 2018. That complicates studies of Seattle’s increases beyond 2016 that use the rest of the state as a control group.
“We no longer have that clean control group,” Vigdor said.