Seattle’s labor market has boomed since the city set its minimum wage on a path to $15 an hour, according to a new University of Washington report. Much of that growth has had nothing to do with the new pay requirement.
Seattle’s labor market has thrived since the city became the first major metropolis in the country to pass a law setting its minimum wage on a path to $15 per hour.
The city’s job-growth rate has been triple the national average, for example.
Much of that success, though, can be attributed to trends separate from the minimum-wage law itself, such as the growth of Seattle’s tech sector and its construction boom, according to a new report that University of Washington researchers presented to the City Council on Monday.
The report looks at records from Washington state’s Employment Security Department from when the law was passed, in June 2014, through the end of last year.
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The multistep law went into effect in April 2015, when the city’s minimum wage became $10 or $11, depending on business size, tips and benefits. Another hike occurred on Jan. 1, 2016. By 2021, the minimum will be $15 per hour for all workers.
During the period covered in the report, typical low-wage workers in Seattle saw their pay increase from $9.96 per hour to $11.14 per hour. Their employment rate and their number of hours increased, as did their overall earnings, according to the report.
To try to isolate the effect of the minimum-wage law from other conditions, the UW’s Seattle Minimum Wage Study Team built a “synthetic” Seattle.
They aggregated ZIP codes outside the city that had previously shown numbers and trends similar to ZIP codes inside the city. The researchers then compared what happened in the real Seattle from June 2014 through December 2015 to what happened in the synthetic Seattle.
Pay for low-wage workers climbed more in real Seattle than in synthetic Seattle, while their employment rate and hours climbed slightly less.
“Seattle’s experience shows that the city’s low-wage workers did relatively well after the minimum wage increased, but largely because of the strong regional economy,” it says. “Although the minimum wage clearly increased wages for this group, offsetting effects on low-wage worker hours and employment muted the impact on labor earnings.”
Real Seattle had more businesses open after the law passed, while synthetic Seattle had fewer businesses close.
“We do not find compelling evidence that the minimum wage has caused significant increases in business failure rates,” the report says.
In an email Monday, the advocacy organization Working Washington said the report demonstrates how the minimum-wage law’s “Chicken Little” critics, who predicted the sky would fall on Seattle’s economy, are wrong.
Many employers said they’d be raising prices. But an analysis of grocery stores, restaurants and other stores by the UW team found little to no evidence of that.