On April 1, the minimum wage for Seattle businesses employing more than 500 people will rise to $11 an hour, the first step in the city’s march toward a citywide $15 minimum wage. As to how the increase will play out, there are guesses, but the size and scope of the ordinance really put Seattle in uncharted territory.
A team of seven researchers from the University of Washington and two economists from Washington State’s Employment Security Department has been selected to study the economic ripples of such an increase. Jacob Vigdor, Daniel J. Evans Professor of Public Affairs at UW, leads it. “Where are the dollars going?” wonders Vigdor. “And where are they coming from?”
Cities like Seattle, SeaTac and, now, San Francisco are leaders, or at least outliers, not only in the size of their wage increases, but also in enacting the increases at a municipal level. Municipal wage hikes are rare compared to statewide hikes, and that difference, said Vigdor, is important.
“State-level minimum wage is harder to escape,” he said. “If Washington increased its minimum wage, some businesses could move to Oregon, but it would be hard. In Seattle, it’s easier to move just down the road.”
The rarity of city level wage increases and the magnitude of Seattle’s increase mean there is little data for the long-term ramifications. A University of California-Berkeley study commissioned by Mayor Ed Murray’s office last year concluded that wage increases do not result in negative effects. But the authors of that study admitted they could not predict the impact of a “significant” increase. As more cities, such as Chicago, Los Angeles and New York move to follow suit, policymakers will likely crave more reliable, evidence-based arguments for against supporting their own minimum-wage measures.
The studies that do exist, said Vigdor, tend to focus on administrative records, which reveal increases and decreases in total earnings, but do not examine who, exactly, is gaining or losing. “Our goal,” said Vigdor, “is to go beyond the cut-and-dry numeric picture.”
The study will be split into four parts. The first is to look at state data for wages. While all states have some amount of information about earnings, Washington is one of only four states that track hours worked. “That data is enormously helpful,” said Vigdor. “We can use it to measure whether worker hours increase or decrease.”
However, that data doesn’t say much about either the employers or employees. Some specific business sector or demographic of workers may be disproportionately affected, for better or worse. “If you look at what’s happening already, there are some people that are not happy and some that think it’s great,” said Vigdor.
The second part will consist of an employer survey that will ask businesses about their most commonly sold products, where they buy their inventory, which services they use and how they price their products. In a year or two, the research team will follow up with those businesses to see what’s changed. Vigdor used the example of how a restaurant cleans its linens. “Maybe instead of using a service in Seattle, [the restaurant] might ship them down to Renton.” The goal is to gauge how general business practices change.
Third, the study will send people into the community to interview low-income workers and parents to measure the impact on the communities that the minimum wage increase is designed to help most. One concern is that, as their wages increase, low-income families may lose some of the government benefits they use now.
In the final step, the researchers will compile and present the information they’ve gained.
When the city commissioned this study after the minimum wage ordinance was passed, the idea was that it would span five years – long enough to see almost full implementation of the phased-in wage increases, which run into 2021 for some employees. That remains the goal, but completing the full study is contingent on Vigdor and his team finding enough money; they were chosen, in part because they promised to fund most of the project themselves. The city allotted them $250,000. To date, the research team has raised $467,000 in external grant money, and has $1 million in outstanding applications.
Vigdor said they currently have enough money to begin and get good baseline date, plus some amount of follow-up. But the exact amount of follow-up and the length of the study will depend on finding money.
If he has any goal, it’s to “elevate the public discussion beyond shouting matches.” And he’s no stranger to heated debates. “I’ve done studies on immigration, gentrification and more, so I’m not new to controversial subjects,” he said. But he conceded that, no matter what they find, people will accuse him of bias. “Our job is like being a referee. People don’t always think the referee is being impartial. If people are inclined to shoot the messenger, all you can do is put on your Kevlar.”
If completed in full, could this study have national implications? As a talking point, almost certainly, but Vigdor said the results won’t necessarily translate even to other major metropolises. Seattle, being an isthmus, is sort of locked in by the Puget Sound and Lake Washington, which may make it more difficult for businesses established in the city to go to the suburbs. San Francisco is the same, with water on three sides. Kansas City, on the other hand, has no such barriers, making the suburbs and the city more fluid. Were that city to raise its minimum wage, it could lead to more of an exodus on the part of business.
Vigdor doesn’t believe this study will close the book on the minimum wage debate. If anything, he said, it could reveal that deciding on a minimum wage may work best on a city-by-city basis. Depending on size, population and industry, “what’s best for Seattle may not be what’s best for Ellensburg.”
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