Study Finds Minimum Wage Hike May Hurt Lowest-Paid Workers


The release of the findings coincides with Cleveland Mayor Frank Jackson announcing that he proposes to raise the minimum wage of city workers to $15 an hour.

The study excluded multisite employers (or about 38 percent of all city workers) and has not been peer-reviewed, but because researchers had access to an unusually large database - and because Seattle's wage hike was so big - some economists are ready to conclude it bears out fears the nationwide push for higher minimum wages would have unintended and unpleasant consequences.

There would be about 5,000 more low-wage jobs in the city without the law, the study estimated.

Seattle was one of the first USA cities to adopt a $15 minimum wage law, and its experience is being closely watched as other cities have followed suit and as advocates push for a higher federal minimum wage. However, there have been other indications that the $15 minimum wage has had awful effects on business, including a higher rate of restaurant closings in the city.

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The study comes on the heels of a University of California - Berkeley report last week that found the law boosted restaurant workers' pay without costing jobs. Their wage will be, without-a-doubt, devalued by the forthcoming cost-of-living leaps which will be borne by them to support the increase to unskilled minimum-wage workers. Normally, researchers would compare Seattle to a city with near-identical variables, but a city that, unlike Seattle, did not significantly raise its minimum wage.

My primary concern is toward skilled and professional workers who already earn more than $15 per hour and have expended serious effort to make those gains in both skill and compensation. Their employers too will have to cope with the rising costs of doing business driven by the increase to minimum wage which will soon reverberate throughout the province's economy. The larger the minimum wage increase, the greater the effect, the study found. But some analysts doubt the study's methodology, and attribute the low-wage job decrease to Seattle's booming labor market. Single-site businesses, though - which are counted in the report - could include franchise locations that are owned separately from their corporate headquarters.

As to the substantial impact on jobs that the UW researchers found, Vigdor said: "We are concerned that it is flaws in prior studies. that have masked these responses". In fact, it's been noted, according to The Washington Post, that even at smaller companies, employment rates didn't actually change, the implication being that they were just hiring more experienced workers. "Data is pointing to: Since we have to pay more, employers are looking for people with experience who can do the job from Day 1". So while those receiving the higher wages are benefiting from the new policy, others are not getting jobs or have seen their hours reduced.

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