Job Losses from Minimum Wage Increases Worse than Reported

Date: August 25, 2015

Seattle, San Francisco and LA all raised their minimum wages, costing the restaurant and hotel industries thousands of jobs. And those numbers might not even tell the whole story.

Three West Coast cities raised their minimum wage—and are now paying the price in job losses. 

And the ongoing fallout may actually be worse than what the data shows, according to the American Enterprise Institute.

Seattle began the phase-in of the increase, raising the minimum wage to $11 in April. San Francisco raised its minimum wage to $12.25 in May. And the Los Angeles City Council passed a measure to raise the minimum wage for hotel workers to $15.37 per hour, which took effect in July.

The Proof Is in the Pudding (So to Speak)

Within the past year, about 2,500 restaurant jobs were lost in the San Francisco metro area, along with 2,200 hotel jobs in the LA area. Between January and June, Seattle lost about 1,300 restaurant jobs.

Those numbers are shocking—but the situation might actually be more dire.

The problem with these commonly reported figures is that the Bureau of Labor Statistics (BLS) uses “employment by industry for entire Metropolitan Statistical Areas (MSAs) or Metropolitan Divisions (MDs), and not for the main individual cities that those MSAs and MDs are based on,” Mark J. Perry wrote on his AEI Carpe Diem blog.

That means the BLS includes the job gains in the surrounding, suburban areas of Seattle, San Fran and LA, and that “might have actually offset some of the job losses within the cities, making the job losses in the city look better than what gets reported for the entire MSA,” Perry explained.

Effects of wage increases go well beyond the city level, too. See how NFIB has been leading the charge against minimum wage increases in states such as CaliforniaWashington and elsewhere throughout the country

Related Content: Analysis | Labor | Minimum Wage | National

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