Seattle Minimum Wage

There's a widely held belief that the minimum wage hurts low wage employment.  There's basically no evidence of this.

Washington state has one of the highest minimum wages in the country and among the lowest unemployment.  The statewide was $9.19 in 2013 and rose to $9.47 at the start of 2015.

Seattle is one of several cities that's voted in a gradual rise to a $15 minimum wage.  Prior to 1Apr2015, it was the same as the state, $9.47.  On that date, it went up to $10 for small businesses and $11 for big ones.  1Jan2016, it went up a further dollar to $11 for small businesses and $12 for big ones (big is defined by 500 or more workers).

Conservatives insisted that this would surely cause a spike in unemployment.  And sure enough, they managed to find one.  The very conservative "American Enterprise Institute" put together BLS data that seemed to show it and conservatives and business columnists around the country jumped on board.  Here's one from Forbes.   Ooh, scary, 9 months (8 actually, but we all know conservatives aren't good with anything that involves numbers) of declining employment.

But wait:  here's the same data, charted out to August this year

 Note that the climb in unemployment seems to have ended, and by August (the latest that data has been compiled for, it was back down almost to the low.  Well then, couldn't it have been lower without the burden of the high minimum wage?  Perhaps, but notice that the biggest declines took place after the second hike, which was almost double the size of the first hike.  And mysteriously, the sharpest drop occurred after the statewide wage hike that took place that January.

But here's the regional data.  Seattle (population 630K) is the biggest city in King County (pop 2M), and the whole thing is in the Seattle Tacoma Bellevue Metropolitan Statistical Area (pop 3.7M)

The pattern is almost exactly the same, and the rest of the MSA only got the statewide wage hike, not the city one.  Note also that Seattle's unemployment is almost a point lower than the regional, despite the higher wage, and the difference seems to be the same, irrespective of what Seattle's minimum wage is.    From these data, we can't be exactly sure what's causing these fluctuations, but this is pretty good evidence that it's not the minimum wage.  It's plainly dominated by events that are taking place at a much larger scale than the city itself.  Seattle is the biggest employment hub in the region, but it's not a large enough share to have this universal effect.  And of the 5 minimum wage hikes captured in these graphs (1Jan2013, 1Jan2014, 1Jan2015, 1Apr 2015, 1Jan2016), only one of them correlates with climbing unemployment.

This author makes a pretty good case that the insistence is not, and never has been, about the minimum wage depressing employment, but about employers wanting to keep their workers a little bit scared and desperate.  Scared and desperate workers don't make waves, like demanding better wages or safer working conditions.