Minimum Wage Hike
Fast food workers on strike for higher minimum wage and better benefits (On April 14, fast food workers around the USA walked out on strike. Protesters gathered outside the McDonald's restaurant at Lake Street and 3rd Avenue in Minneapolis. They called for a $15 per hour minimum wage, paid sick days, and union rights. Within the last year, the cities of Seattle, Los Angeles, San Francisco, and New York have raised the minimum wage to $15 per hour.) Image Credit: Fibonacci Blue

Many cities around the U.S. are pushing for their minimum wages to nearly double, but what kind of impact will it have on the economy, jobs, and the public at large?

Seattle has the highest minimum wage in the country. Last January, Seattle’s minimum wage increased from $11 an hour to $13 for employers, the second biggest increase in less than a year.

Seattle Minimum Wage Hike Study

But, a new study released on Monday by a team of economists at the University of Washington suggests the way hike led to a major decline in employment for low-wage workers, and a drop in hours for those who kept their jobs.

Ultimately, the biggest finding in the study is the negative impact of jobs and hours offset the benefits of higher wages. For example, on average, the study found, low-wage workers earned $125 per month less because of the higher pay, a small but a significant decline for anyone working a minimum wage job.

Jacob Vigdor, one of the University of Washington economists involved in the study, explained the goal of the policy was to help people make more money but, had the opposite effect.

Minimum Wage Seattle Study
Woman protests for a higher minimum wage (On April 14, fast food workers around the USA walked out on strike.
Protesters gathered outside the McDonald’s restaurant at Lake Street and 3rd Avenue in Minneapolis. They called for a $15 per hour minimum wage, paid sick days, and union rights. Within the last year, the cities of Seattle, Los Angeles, San Francisco, and New York have raised the minimum wage to $15 per hour.) Image Credit:
Fibonacci Blue

The goal of this policy was to deliver higher incomes to people who were struggling to make ends meet in the city. You’ve got to watch out because at some point you run the risk of harming the people you set out to help.”

The report’s finding is still early and has not been subjected to peer review. Moreover, the authors in the study said that if their results are correct, their research begs the question – how much of a minimum wage is beneficial to the economy?

The paper does not address whether displaced workers found other opportunities in other cities. Also, some companies such as Uber are not included in their data.

Federal Minimum Wage Hike Coming Soon?

Overall, the new research will have political ramifications at a time when the minimum wage is the center of many public policy arguments. For instance, Hillary Clinton called for the federal minimum wage to be raised to $12, and she was faced with pressure from Bernie Sanders’ supporters who argued for a $15 minimum wage increase. It is important to note that the federal minimum wage is now $7.25/hour.