Rising minimum wage doesn’t cut employment, campus study suggests

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Simran Sarin/Staff

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Seattle’s rising minimum wage has not affected employment rates, according to a UC Berkeley study released Tuesday by the Institute for Research on Labor and Employment.

The study analyzed county and city-level data from 2009-16 on all employees counted in the Quarterly Census of Employment and Wages working in the food service industry.

The food service industry was chosen by campus researchers and co-authors Michael Reich, Sylvia Allegretto and Anna Godoey because of its extremely high employment of minimum wage workers.

Seattle’s analysis is the first in a series of studies that the Institute’s Center on Wage and Employment Dynamics, or CWED, will issue on the effects of the recent wave of minimum wage policy change, specifically in cities offering $12 to $15 per hour wages.

Seattle was chosen as it was one of the “early movers.” CWED has plans to release reports with similar studies of cities such as Oakland, Chicago, San Jose, New York City and San Francisco among others.

In January of this year, Seattle’s minimum wage for large firms — those employing more than 500 people and with health insurance — rose to $15 per hour. Because of the recent implementation, however, this data was not included in the study. Small firms offering no health insurance will not rise to $15 an hour until 2021.

The study used a “synthetic control” method to identify the causal effects of Seattle’s minimum wage policy upon wages and employment. The model looked at county-level data from the rest of the United States and other areas in Washington state that did not spill over into the Seattle area, to match Seattle’s statistics for a six year period prior to when the minimum wage policy was implemented.

Results of the Seattle study show that employment did not decrease in reaction to a gradual minimum wage increase. “Our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies,” reads the study’s abstract.

Not every party has recognized these results.

“A study in one of the wealthiest cities in the U.S. does not reflect the impact drastic minimum wage increases could have across the country and should not be relied upon as this discussion continues – especially considering other studies have refuted these results,” said Vice President of Communications for the National Restaurant Association Leslie Shedd in an emailed statement.

Shedd’s statement made reference to a 2016 report by the University of Washington analyzing the impact of Seattle’s minimum wage ordinance through 2015. The UW report did not yield the same conclusions as CWED’s; UW concluded that the ordinance slightly reduced the employment of low-wage workers.

In addition, according to Allegretto, the restaurant industry was chosen because it experiences an almost 100 percent turnover rate. Such a turnover rate creates a high cost of business because of the need for near constant recruiting and training, Allegretto explained.

“(Raising the minimum has) been a huge debate for many decades now,” Allegretto said. “Economists typically think we’re in a supply and demand economy, but the low wage market is not that simplistic.”

Audrey McNamara is the executive news editor. Contact her at [email protected] and follow her on Twitter at @McNamaraAud.