According to a study conducted by a group of economists at the University of Washington last month, the costs to low-wage workers in Seattle outweighed the benefits by a ratio of three to one. Seattle officials have been gradually increasing the city’s minimum wage up to $15 an hour to help out low-income workers. Los Angeles officials have also been gradually increasing the minimum wage, but the new study may change people’s minds about having a $15 minimum wage. The study estimates that the average low-wage worker in the city lost $125 a month because of the hike in the minimum wage. David Autor, an economist at the Massachusetts Institute of Technology who was not involved in the research, stated.
This strikes me as a study that is likely to influence people. If I were a Seattle lawmaker, I would be thinking hard about the $15 an hour phase-in.
The study claims that businesses cut their payrolls, put off new hiring, and reduced hours or let their workers go in response to the increased wages. The new study contradicts several previous studies that found that the benefits of increases for low-wage workers exceed the costs in terms of reduced employment. Critics of the research argue that the authors did not include large employers with locations both inside and outside of Seattle in their calculations, among other things. The study was published as a working paper by the National Bureau of Economic Research and has not yet been peer reviewed. Los Angeles can definitely learn from Seattle’s minimum wage increase to avoid some of the same mistakes.