POLITICS
06/28/2017 06:51 pm ET

Minimum Wage Critics Gain Ammunition From New Study

Progressive economists have pounced on the methodology of a study suggesting Seattle's wage hikes reduced earnings for low-wage workers.

Minimum wage activists across the country suffered a blow on Monday when a study of the $15-minimum wage increase in Seattle appeared to support the conservative argument that the popular progressive policy hurts employment.

The study, conducted by University of Washington researchers at the city’s behest, concluded that the first two stages of the minimum wage hike ― from $9.47 to $11 in 2015, and $11 to $13 in 2016 ― resulted in reductions in hours that, on average, cost low-wage workers in the city $125 a month in pay.

Progressive economists immediately disputed the study’s methodology and pointed to alternative research that contradicts its findings.

But that won’t stop the study from being used as a weapon in the fight against future increases. Opponents of the Fight for $15 movement took a victory lap, while the union-backed campaign called the study ”an attack.” 

“Even in a place like Seattle, there is such a thing as going too high, too fast,” said Michael Saltsman, whose group, the Employment Policies Institute, campaigns against minimum wage hikes. “If even $13 is too extreme in Seattle, then it’s absolutely too extreme for St. Louis or Kansas City or Minneapolis.”

“I do think [this study] will inform the debate elsewhere,” he added.

The Fight for $15 campaign began in 2012, when the Service Employees International Union organized fast-food workers in New York City in a series of walkouts to demand “$15 and a union.”

The movement has had monumental success with the $15 part of that formula.

Considered fantastical at the time, raising the federal floor on pay to $15 has since become the mainstream position in the Democratic Party, with support coming from the majority of the Senate Democratic Caucus. San Francisco, Los Angeles and the state of New York are all in the process of phasing in the new living wage benchmark. Other cities and states are considering it seriously.

But Seattle occupies a historic place in the Fight for $15 movement: In June 2014, it became the first major American city to adopt a $15 plan. The Seattle ordinance created a timeline for all employers in the city to reach a $15 minimum, depending on the size of the individual employer and benefits offered. Large employers that don’t help pay for medical coverage must already pay at least $15 this year. Not all smaller employers will have to meet that minimum until 2021.

The effects of minimum wage increases on employment ― or lack of them ― have been studied for years. But not until the $15 measures in Seattle and elsewhere did researchers have the opportunity to examine vast increases in real time. More studies of the Seattle test case will inevitably follow, possibly with mixed or contradictory results. A separate study released last week by the University of California, Berkeley, for example, asserted that Seattle’s hikes have “not affected” employment.

"Fight for $15" activists march in New York City on Sep. 4, 2014. A new study could give opponents of the $15 minimum wage ne
Reuters
"Fight for $15" activists march in New York City on Sep. 4, 2014. A new study could give opponents of the $15 minimum wage new ammunition.

Dean Baker, co-director of the progressive Center for Economic and Policy Research, has previously cautioned against pushing the $15 minimum on areas where the economy cannot sustain it. Doing so could both lead to job loss and undermine political support for efforts to boost low-wage workers’ pay over the long term, he said. 

But Baker argued that the University of Washington study is too flawed to demonstrate that the increase in Seattle has a had a negative impact. He said he believed there were problems in the control group meant to simulate what Seattle’s labor market would look like without the gradual minimum wage hikes.

“It’s not clear that this analysis told you much about the minimum wage,” he said.

Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and former economic adviser to Vice President Joe Biden, wrote a HuffPost blog post on Tuesday in which he echoed Baker’s skepticism about the study’s results. And the liberal-leaning Economic Policy Institute took the study to task for failing to include data from employers with multiple locations, which employ nearly 40 percent of Seattle’s workforce. (The University of Washington researchers weren’t able to find data that allowed them to definitively distinguish between those firms’ employees inside and outside of the city’s boundaries.)

In any event, minimum wage advocates argue that the politics of the issue have rarely been closely tied to the research. Polling shows that raising the minimum wage is popular among Republicans and Democrats alike, proponents note. And perhaps thanks to the Fight for $15’s growing profile, a majority of the American public now supports raising it to $15 an hour.

“There have always been conservative studies claiming job loss from the minimum wage that have been held up by corporate lobbyists trying to fight raises and protect their bottom line,” said Paul Sonn, general counsel at the National Employment Law Center, a nonprofit that has played a key role in advocating for minimum wage hikes. “But despite some divisions in the research, policymakers have thought the benefits of raising pay for workers across the bottom of the economy significantly outweighed any tradeoffs. It’s hard to see that changing.”

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