In an effort to improve the lives of minimum-wage workers across the city, Seattle recently enacted a plan to raise the minimum-wage up to $15 an hour over the course of a few years. A new study from the University of Washington suggests, however, that this may actually be making their lives worse.
The results appear to indicate that some companies—unable to keep up with the rising costs—have been forced to reduce hours, put off hiring new employees and cut their payrolls elsewhere. Apparently, the costs to low-wage workers outweigh the new benefits by a ratio of three to one. According to the study, the average low-wage worker in the city lost $125 a month because of the minimum-wage hike. Clearly, this is not what the city of Seattle intended, and could have serious implications on whether such systems will be adopted elsewhere in the future.
However, there are a few other factors at play which the study itself doesn’t address. Firstly, large companies were excluded from the study. This important because if a smaller company cuts payroll, it’s still possible that a larger company could expand and thereby create more opportunities. For another thing, higher-wage employees (those making over $19 an hour) actually became more employed during this time span. In fact, it’s been noted, according to The Washington Post, that even at smaller companies, employment rates didn’t actually change, the implication being that they were just hiring more experienced workers. This could be a negative for low-wage employees as they could be losing their jobs, or it could be a positive as they’re actually just being promoted into better earning situations.
The gist of it all is that it looks like we’ll need more studies and more time to see how these minimum wage hikes play out in the long term. It’s a complicated issue, and one where conclusions shouldn’t be rushed into.
You can see the full UW study here.