New evidence suggests that Seattle’s ‘radical experiment’ might be a model for the rest of the nation not to followMark J. Perry
February 18, 2016 10:13
AEIdea
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.
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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 basisâ€). Those figures are based on employment data for the city of Seattle only (not the Seattle MSA or MD), and are available from the BLS website here (data are “not seasonally adjustedâ€). Those three negative employment effects are displayed in the three charts above and I’ll explain each in greater detail below.
Government imposes higher labor costs on businesses, and businesses respond by laying off people and/or not hiring new people. What a non-shock! And with the second cycle of cost increases newly imposed, it's not likely to improve, or even stay the same. Brilliant!
