Steps Toward $15/Hour: Early Outcomes of the Seattle Minimum Wage Ordinance (WITHDRAWN)

Background and Purpose: In 2014 the City of Seattle passed into law an ordinance mandating a substantial increase in the city minimum wage. Seattle wage floors will increase gradually over the next several years to become the highest in the nation. By 2017, most low-wage jobs for large employers will pay $15 per hour; all private sector employers must pay an inflation-adjusted version of this level by 2021.

As a tool to possibly reduce earnings inequality and symbolically acknowledge the dignity of all work, wage mandates represent an important area of current social justice work. However, raising wages may result in higher prices for goods, fewer jobs for low-wage employees, and reductions in means-tested benefits for workers who do receive raises.  This paper reports on findings from the multi-method Seattle Minimum Wage Study which examines how the Seattle wage mandates affects workers, employers, and the economy as a whole. We pay particular attention to distributional effects and impacts on immigrant workers and business owners, many of whom may be more vulnerable than the general population to economic changes.

Methods:  This presentation will report on findings from several sources: survey data collected via phone and web from over 500 randomly-selected for-profit and non-profit employers; in-person plus phone semi-structured interviews with 55 low-wage workers with children; price data collected via retail visits and web-scraping; and administrative data from the State of Washington Unemployment Insurance system (embargoed until July 2016). Data analysis follows standard statistical, econometric and qualitative data approaches.

Results: The majority of Seattle employers surveyed (92.1%) were aware of the Ordinance at the time it took effect, yet some were unclear about specific requirements. More than 20% of all firms reported minimum wage levels higher or lower than required, with one in 1 respondents reporting that the Ordinance required them to pay a $15 per hour minimum wage immediately as of April 1, 2015. Employers most commonly reported responding or planning to respond to the Ordinance by raising wages for Seattle employees, raising prices on goods and services, and increasing wages for employees earning between $11-$15/hour. 

Separate price research found little or no evidence of price increases for grocery, retail, gasoline or rent corresponding to the initial wage increases.  Price data did suggest a possible increase in restaurant prices.

Nearly all the workers in the study knew about the Seattle Minimum Wage ordinance, but most had vague or incorrect knowledge.  Immigrant workers were less likely than native-born to know their wage rights.  Those aware of the law generally had positive or ambivalent opinions.  Many workers expressed doubt that the law would fundamentally alter their financial situations, in part because the low-wage earners in our sample relied heavily on substantial government and community assistance which would phase out as they earned more. 

Conclusions:  Minimum wage mandates effectively raise wages but affect employers and workers in different ways.  Discussion will focus on the tradeoffs involved in this approach.