Evidence Shows Seattle's Minimum Wage Costing Jobs

Date: February 22, 2016 Last Edit: March 02, 2016

It made history by passing the highest minimum-wage rates in the nation in 2014, but new research shows it could turn out be an historic blunder.

“Early evidence from the Bureau of Labor Statistics (BLS) on Seattle’s monthly employment, the number of unemployed workers, and the city’s unemployment rate through December 2015 suggest that since last April when the first minimum wage hike took effect:

a) the city’s employment has fallen by more than 11,000,
b) the number of unemployed workers has risen by nearly 5,000, and
c) the city’s jobless rate has increased by more than 1 percentage point (all based on BLS’s ‘not seasonally adjusted basis’).

“Those figures are based on employment data for the city of Seattle only (not the Seattle MSA or MD),” writes Mark J. Perry in an analysis for the American Enterprise Institute. Perry is a professor of economics and finance at the University of Michigan.

Other highlights from Perry’s report include:

  • “Seattle’s city council made history in June 2014 by unanimously passing legislation that will eventually bring the city’s minimum wage up to $15 an hour, the highest in the nation. Washington State already had the distinction at that time of having the highest state minimum wage in the country at $9.32 an hour. The first increase to $10 an hour for some Seattle businesses and $11 for others took place on April 1, 2015. Additional increases to $12.00, $12.50 or $13 an hour took effect for most employers on January 1, 2016. Further increases will continue until the city’s minimum wage reaches the full $15 an hour, which will happen on the first of the year in either 2017, 2018 or 2019 for most employers and as late as January 2021 for some small businesses with fewer than 500 employees.
  • “Is Seattle’s radical experiment with the highest-ever minimum wage in US history serving as a ‘model for the rest of the nation to follow’? Or is Seattle serving as an ‘economic canary in the coal mine’ for other cities and states (and the country) considering the ‘bold action’ of imposing higher labor costs on employers by as much as $15,500 annually per full-time minimum wage workers if they enact legislation increasing the minimum wage from $7.25 to $15 an hour?
  • “Maybe the city of Seattle will recover from the serious job market weaknesses that it has experienced since last April when its minimum wage law began imposing significantly higher labor costs on the city’s employers. Considering that Seattle had the largest three-month loss of jobs in city history between September and November last year following the first phase of wage hikes on the way to $15 an hour, it might be the case that the early evidence suggests that this is a ‘radical model for the rest of the nation to NOT follow.’ ”

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… the early evidence suggests that this is a ‘radical model for the rest of the nation to NOT follow.

Mark J. Perry, University of Michigan economist and American Enterprise Institute scholar. (Photo courtesy of AEI)

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