Seattle Voted to Hike the Minimum Wage to $15 an Hour. Here’s What Happened to Seattle’s Job Market.

[rangerrebew]

Seattle Voted to Hike the Minimum Wage to $15 an Hour. Here’s What Happened to Seattle’s Job Market.

Leah Jessen / October 22, 2015

The $15 minimum wage increase in the Seattle area “is getting off to a pretty bad start,” according to a new report.

Data shows the Seattle Metropolitan Statistical Area (MSA) lost 700 restaurant jobs from January-September of this year and a report from the American Enterprise Institute suggests this could be the product of adverse effects of minimum wage hikes on restaurant jobs.

“What is also noteworthy about the loss of Seattle restaurant jobs this year is the fact that restaurant employment in the rest of Washington state is booming this year,” writes Mark Perry, an AEI scholar and professor of economics and finance at the University of Michigan’s Flint campus.

A report by Perry, published Wednesday on AEI’s public policy blog Carpe Diem, notes that there has been an increase of 5,800 new restaurant job positions in the rest of the state of Washington.

While the overall job growth rate this year for the Seattle MSA is higher than the national average, the drop in restaurant jobs stands out. The past three years have seen restaurant employment in the Seattle MSA area at an average job gain of almost 4,000 employees during January-September, according to Perry’s work.

“One likely cause of the stagnation and decline of Seattle area restaurant jobs this year is the increase in the city’s minimum wage,” Perry wrote.

The Seattle City Council passed a $15 minimum wage ordinance that is currently being phased in. On April 1, the minimum wage jumped to $11 per hour.

But correlation does not necessarily mean causation.

Salim Furth, a research fellow in macroeconomics at The Heritage Foundation, points out that the data numbers are for a metropolitan statistical area. The data includes 600,000 people who live in Seattle and 3 million people that live in cities and suburbs that aren’t affected by the Seattle minimum wage ordinance.

“It’s too soon to tell for sure, but there is already some preliminary evidence that the recent minimum wage hike to $11 an hour, along with the pending increase of an additional $4 an hour by 2017 for some businesses, has started having a negative effect on restaurant jobs in the greater Seattle area,” Perry wrote.

James Sherk, research fellow in labor economics at The Heritage Foundation, notes to The Daily Signal that the AEI data is suggestive evidence but by itself does not prove minimum wage caused the drop in jobs.

Sherk says the United States does not have much historical experience with high minimum wages, “but what we have is bad.”

For example, in American Samoa (a Pacific island chain that is a United States territory), a $7.25 minimum wage increase was applied in 2007 by Congress.

“This would be the economic equivalent of raising the minimum wage to $20.00 an hour in the continental U.S,” Sherk’s research states.

“American Samoans have a largely separate economy and considerably lower incomes than residents of the continental United States.”

According to Sherk, the American Samoa tuna canning industry minimum wage stood at $3.26 per hour in the beginning of 2007.

After wage hikes started to apply, canned tuna industry employers began to lay off and cut hours of employees. One cannery shut down in 2009.

“Samoan employers responded to higher labor costs the way economic theory predicts: by hiring fewer workers,” Sherk wrote. “Congress hurt the very workers it intended to help.”

[Oceander]

The only people who should be surprised by this are the half-wits, I mean democrats/liberals.

[mountaineer]

Report: Local Minimum Wages Really Hurts Restaurants
By Connor D. Wolf Published on November 21, 2015

Low-wage businesses like restaurants experience a range of issues in cities that increase their minimum wage, according to a report released Friday by the American Action Forum.

The report, titled “2015 Local Minimum Wage Increases and Restaurant Employment Trends,” looks at several major cities that have increased their minimum wages in the past year. What it found is those cities often show negative trends in employment. The consequences are often worse for low-profit industries like restaurants.

“Restaurant employment in metropolitan areas with cities that raised the minimum wage in 2015 has lagged behind employment in the rest of the states,”the report details. “This year restaurant employment in the metropolitan areas with major cities that raised the minimum wage only grew 1.1 percent through September. In the surrounding state areas, however, restaurant employment grew 2.8 percent.”

The slow growth in the restaurant industry can be seen almost across the board. The report, though, does cite a few exceptions where growth is the same in the city that raised its minimum wage compared to the rest of the state.

“In particular, restaurant employment in Chicago grew at about the same rate as in the rest of Illinois,” the report notes. “Also, restaurant employment in Oakland grew faster than the rest of California.”

Several cities in California increased their minimum wage above the state law — some cities as far as $15 an hour. A national movement backed by labor unions argues the $15 minimum wage is what policymakers should pursue. In comparison Oakland is the exception, with other cities showing the usual sluggish growth.

“Despite the faster growth in Oakland, however, restaurant employment in the three major cities of the San Francisco Bay Area only grew 1.9 percent,” the report states. “That is 1.7 percentage points slower than the 3.6 percent growth in restaurant employment experienced in the rest of California.”

Currently, the federal minimum wage is $7.25 an hour. Twenty-nine states and the District of Columbia have gone higher. Seattle led the way in passing the $15 minimum wage back in June 2014. San Francisco and Los Angeles followed not long after. Each local ordinance phased in the new wage over the course of several years. Thus far, no state has passed a $15 minimum wage. New York, Florida and Massachusetts are all considering it.

Experts and lawmakers are fairly divided on the issue. Supporters say the $15 minimum wage will help the poor by allowing them to more easily afford basic necessities. The increased spending will then stimulate economic activity. Critics, though, say such an increase will actually hurt the poor by limiting job opportunities.

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