
Seattle’s higher minimum wage is actually working fine - hprotagonist
https://www.washingtonpost.com/news/posteverything/wp/2017/06/27/seattles-higher-minimum-wage-is-actually-working-just-fine/
======
ared38
Convenient of this article to ignore that the Berkley study only looked at
food service workers while the UW study looked at a much wider range of jobs
than previous studies.

I'm sickened by my "pro science" party rushing to ignore results that don't
agree with our ideological intuitions. Obviously the UW study has flaws. Let's
give economists a little time to figure out WHY the results are so different
from previous studies before we draw any conclusions.

~~~
lend000
Exactly -- economics is a science. I don't pretend that the world is perfectly
modeled by classical macroeconomic laws, but the burden of proof is on the
pro-minimum wage camp to disprove the laws of supply and demand in this
situation (labor market), rather than the other way around.

If you are not familiar with what classical economic laws would suggest about
a minimum price control on labor (minimum wage), it would

1\. reduce the demand for labor

2\. create deadweight loss (net value changing hands decreases)

The politicization and down-voting of ideas that people (particularly
liberals, in this case) disagree with has a chilling effect. As Warren Buffett
says, the human mind is best at interpreting all information such that prior
conclusions remains intact.

~~~
tuna-piano
Not sure why you're being down-voted.

It's of course disingenuous (and insane) to say that raising the minimum wage
will not cause deadweight loss. Everyone needs to understand that raising
prices of almost anything will reduce the amount of that thing demanded. When
price goes up, people buy less. Wages are just price and labor is a thing that
people buy.

The more complicated issue, which democrats and republicans both ignore, is
the elasticity of demand. Democrats love saying "Minimum wage increases are
good, and they've been proven not to affect the demand for low-wage labor!"
and republicans say "Minimum wage increases are bad, and they've been proven
to increase unemployment!"

The real question is not if demand for labor will decrease (it will), the
question is how much less low-wage labor will be purchased with a certain
increase in the minimum wage, and whether policymakers consider this tradeoff
good.

[http://ftp.iza.org/dp3150.pdf](http://ftp.iza.org/dp3150.pdf)

~~~
monocasa
> It's of course disingenuous (and insane) to say that raising the minimum
> wage will not cause deadweight loss.

Except that there's good data that this doesn't happen, ie. that minimum wage
increases are actually associated with small increases in employment.

There's also very good data that subject of minimum wage increases is fraught
with rampant publication bias.

[https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stan...](https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stanley%20Publication%20Selection%20Bias%20in%20Min%20Wage%20Research-A%20Metaregression%20Analysis.pdf)

    
    
      In the minimum-wage literature, the magnitude of the
      publication selection bias is as large or larger, on
      average, than the underlying reported estimate. Overall,
      correcting for publication bias would transform a
      modestly negative average elasticity to a small positive
      employment elasticity.

~~~
tuna-piano
Honestly, I haven't looked into your claim. But just off-hand, I'm very
skeptical of any evidence that minimum wage increases cause anything but a
decrease (even if tiny) in employment. How many goods in the world do price
increases cause an increase of demand?

Economists have a term for this type of good, "Giffen Good"[1]. And for
obvious reasons, they almost never exist. When does an increase lead to a
demand increase? Why would employers demand more labor with a price floor than
they would without one?

[1] [http://lexicon.ft.com/Term?term=Giffen-
good](http://lexicon.ft.com/Term?term=Giffen-good)

~~~
monocasa
> Honestly, I haven't looked into your claim.

You should read the article I linked. : ) It's a very solid meta-analysis
including pretty much every peer reviewed article on the subject of the past
few decades.

> ... When does an increase lead to a demand increase? Why would employers
> demand more labor with a price floor than they would without one?

The article explicitly doesn't go into why, but I can think of a few reasons.

Totally off hand, I'd put my money on the fact that businesses that employ
minimum wage earners tend to also be disproportionately patroned by minimum
wage earners. Add to that the fact that minimum wage earners tend to pretty
much immediately spend their paychecks, you're left with businesses having
their customer base with more disposable income.

Why don't employers simply raise wages themselves? Aside from the implicit
information asymmetry sort of denoted by this very conversation, it doesn't
make sense from a sort of game theory point of view for an individual business
to go out on a limb without their competitors doing the same at the same time.
In my mind, that makes it a perfect opportunity for government to step in, and
add some lower bounds of acceptability. This way both employees and employers
can have more success.

------
alacombe
OOTH, it's not as if one of the Berkeley author, Michael Reich, was a long
time socialist. From
[https://en.wikipedia.org/wiki/Michael_Reich](https://en.wikipedia.org/wiki/Michael_Reich):

In 1968, while in graduate school, Reich was a founding member of the Union
for Radical Political Economics (URPE).[5] In doing so, as Reich describes in
a biographical compilation piece (A Biographical Dictionary of Dissenting
Economists),[3] he helped "to organize an influential circle of radical
economists." URPE’s agenda, as described by a spokesperson for the group, is
to:

"support an American version of socialism, with public ownership of production
and a government-planned economy to meet social needs rather than the needs of
private profit."

So he's very clearly biased toward proving minimum wage increase's success.

~~~
tobtoh
> So he's very clearly biased toward proving minimum wage increase's success.

You may not have meant it this way, but that sentence implies you have already
dismissed any point he makes purely based on what he believes in. Without any
evidence, you've implied that any conclusions the author makes are
automatically devalued because he will be incapable to undertaking objective
research.

Would you write a similar sentence about say a medical researcher? 'Researcher
is a member of the medical industry and is very clearly biased toward proving
vaccines are safe and necessary'.

(Note: I think it's very important to be aware of influences and biases in
hearing opinions - an important part of critical evaluation. Your comment does
that for the most part ... it's just the last sentence I have an objection to)

~~~
ori_b
This is a very different situation. There is still a huge amount of debate
about the actual effects of minimum wage increases. This is not the case for
vaccines any more. At this point, the evidence for vaccines is strong enough
that pro-vaccine _should_ be the default position. This is not (yet) the case
for raising the minimum wage.

As a result, ideological biases are important to flag, and studies possibly
affected by bias need to be replicated and cross checked.

~~~
apexalpha
>There is still a huge amount of debate about the actual effects of minimum
wage increases.

There is? I would seem that the effects could simply be drawn from real world
results in any other developed nation.

~~~
ori_b
You mean the comparisons showing the USA had one of the lowest unemployment
rates?

------
TimJYoung
We need to make the EITC (Earned Income Tax Credit) much more generous,
removing the necessity for higher minimum wages to fix our demand issues. The
EITC has better knock-on effects in terms of increasing competition for labor
and serves as an employment subsidy for many small businesses that would,
otherwise, not employ anyone. Plus, it is much, much easier to get a "10,000ft
view" of the employment/demand situation at the Federal level, as opposed to a
hodge-podge of local initiatives.

The EITC is a great tool for efficient re-distribution of resources to working
Americans on the lower rungs of the economic ladder. It's efficient and we can
turn the knobs to adjust it as necessary to fit our needs, such as not being
as generous to teenagers that live in an existing household (something that
minimum wage increases do not account for).

The only downside to the EITC is the once-a-year aspect to the distribution.
It would probably be wise for us to develop a more reliable distribution of
the money so that it provides a more even boost to the worker's regular
paycheck.

~~~
greedo
EITC has a massive downside that you're ignoring. The ability of
municipalities to act as laboratories in social policy is essential to
effective governance. Seattle can raise their minimum wage far easier than
having Congress change the Federal minimum wage. And then we can see how it
works in Seattle. Expanding EITC has a huge affect, and is both harder to
enact, and if needed, harder to rollback.

~~~
TimJYoung
That's absolutely true for most new Federal economic/tax policies that are
relatively untested. But, the EITC has been around since the mid-to-late 70s.
We've got loads of data on its effects under all sorts of different economic
scenarios, some of which are included here:

[http://www.epi.org/publication/ib370-earned-income-tax-
credi...](http://www.epi.org/publication/ib370-earned-income-tax-credit-and-
the-child-tax-credit-history-purpose-goals-and-effectiveness/)

~~~
greedo
So Federal Income tax is a relatively old tax policy, weighing in at a hearty
104 years of age. And modifying it and understanding the ramifications of
changes to the tax code is easy? We have a congressional shitstorm whenever
either party wants to raise or lower taxes. And the old adage about getting
three answers when you ask two economists what'll happen is still true, even
discounting ideological baggage.

------
ABCLAW
Oh boy. Time to read another page of comments written by people who think that
price elasticity is always linear and that markets are always efficient!

~~~
trendia
There are studies that avoid assuming perfect, instantaneous markets. They,
too, show nuanced but negative long term effects of min wages.

[http://voxeu.org/article/long-run-employment-effects-
minimum...](http://voxeu.org/article/long-run-employment-effects-minimum-wage)

~~~
crdoconnor
"More recently, some researchers (e.g. Dube et al. 2010) exploit differences
between counties sitting on each side of a state border where one state raised
their minimum wage and another did not. Many, but certainly not all, studies
that use these approaches deliver SMALL disemployment effects."

Daniel Aaronson, Eric French, Isaac Sorkin from your article ^^^

Dube et al 2010's ACTUAL result:

"We compare all contiguous county-pairs in the United States that straddle a
state border and find NO adverse employment effects"

This a pathetic piece of weasel wording, although not something I'm terribly
surprised to see from them specifically.

~~~
trendia
The paper itself is much more nuanced. Their model predicts the results of
Dube, especially in industries where few of the employees receive salaries
near min wage. It also predicts the minimal disemployment effects (or non-
existent disemployment effects, as in Dube) in the short run.

Where it differs is in the long-run in industries where 1) many employees
receive near min wage, and 2) capital can easily replace labor.

So, Aaronson finds disemployment in low cost / fast food restaurants in the
long run, but not in expensive sit down restaurants (which can absorb
additional labor costs).

------
DavidWoof
I'm more or less sympathetic to the idea that the Seattle minimum wage
experiment can be having negative effects. Card/Krueger has to have a limit
somewhere, and I suspect certain jurisdictions are approaching or exceeding
that limit.

That said, excluding multi-location employers from a minimum wage study just
seems to me to be so obviously flawed as to border on pure dishonesty.

I'm truly curious how things like this happen. Did UW publish this as a
reasonable study with limited findings only to find the press massively
misreported it? Or did the desire for media coverage lead the researchers to
overstate the findings just to get in the press? I personally don't think
political bias drove this. It looks like researchers at UW made a perfectly
reasonable small limited study that added a small amount to our knowledge, but
then either the researchers or the university or the press advertised it as an
exhaustive answer to a complex question.

~~~
john_horton
It wasn't dishonest - they didn't have the data for those multi-site employers
b/c of how Washington state keeps records. The authors are upfront about this
and try to address the limitation by adding a a survey component---they talked
to these employers to see if their responses to the MW were different.

~~~
DavidWoof
I agree with that, so maybe my post wasn't as clear as it could be.

I would say that in the transmission between the study and the mainstream
press, something happened that is best described as "dishonest", or at the
very least a reckless disregard for nuance. As you point out, and I agree, the
study itself doesn't have that problem. The study itself is quite clear on its
limitations.

So where's the issue? Is it just the general incompetency of the mainstream
press (I could absolutely believe that). Is it the authors crossing every 't'
in the study, but then overstating the findings and dropping the caveats in
their interviews with the media? Is it the UW PR staff overstating the
findings in a way PR staffs are wont to do? A combination of all of these.

I could believe any of those things. But when this study came out a few days
ago, I had to read the study itself to have even a remote awareness of what it
actually said (and remember, I think the findings are probably correct). And
yes, I think that process is best described with the word "dishonest".

~~~
mattmcknight
Mentioned above, but the survey data indicates the effects on multi-site
employers was likely more negative.

[http://m.startribune.com/seattle-study-shows-low-wage-
jobs-d...](http://m.startribune.com/seattle-study-shows-low-wage-jobs-
declined-with-city-minimum-wage-hike/431141493/?section=local)

------
karl11
Two good marginal revolution posts on this:
[http://marginalrevolution.com/marginalrevolution/2017/06/sea...](http://marginalrevolution.com/marginalrevolution/2017/06/seattle-
minimum-wage-study.html) &&
[http://marginalrevolution.com/marginalrevolution/2017/06/min...](http://marginalrevolution.com/marginalrevolution/2017/06/minimum-
wage-evidence-danish-discontinuity.html)

------
sparkling
"You cannot make a man worth a given amount by making it illegal for anyone to
offer him anything less. You merely deprive him of the right to earn the
amount that his abilities and situation would permit him to earn, while you
deprive the community even of the moderate services that he is capable of
rendering. In brief, for a low wage you substitute unemployment. You do harm
all around, with no comparable compensation." \- Henry Hazlitt

~~~
gorpomon
"Quotes are not arguments. Quotes don't begin to convey the real cost and toll
of working for a wage that can't support basic needs and services, let alone
an indulgence, which all lives occasionally need. Quotes in no way capture the
totality of a human life, its compassion, its motivations, its missteps, its
passions, its reasons a person might work a certain job, market forces be
damned. Quotes takes take the words and works of people who dedicated their
lives to a search for the truth and reduces them to ammunition by people who
have plenty, and want to keep it that way. Quotes are intellectually bankrupt.
Quotes mirror the bankruptcy of those who wield them to keep a broken status
quo. Quotes think you should go talk to a person hustlin' to sell Adidas shoes
to get by, rather than post quotes on the internet." \-- Quotey McQuoteface

~~~
btym
Could I get a source on this one?

~~~
nerpderp83
\-- gorpomon

------
eagsalazar2
What do the models say? I'm not an economist but I always feel like decisions
and debates like this are based mostly on people's limited ability to reason
about a very complex system (and probably more so, their biases and personal
interests).

A minimum wage is likely to have a complex and unexpected impact. So what can
be modelled? What experiments have been done where we can simply observe the
impact?

Also what are the goals and how are they prioritized? Do the rights of wealthy
individuals to keep every penny of their earnings outweigh (I hate that I
can't use 'trump' anymore) a societal goal of eliminating poverty or making
sure the poor have a decent standard of living (health care, education,
safety, etc)? Obviously everyone wants both these things (right?) but how are
the weighted?

Aaagghhh!! (Our world is so far away from anything sane I just can't stand it
this morning.)

~~~
Mikeb85
The models say that a rising minimum wage would decrease demand for labour. Of
course, how much it affects actual unemployment depends on how much labour was
previously demanded and supplied. The thinking of course is that aggregate
income among low earners makes up for the increased unemployment, and the
extra spending power they have improves the economy as a whole, leading to
less unemployment than a linear relationship between minimum wage and
unemployment would suggest.

Edit - at the very end I should add, "assuming the demand for labour actually
increases aggregate income for those workers affected". If a min wage hike is
too severe or unemployment already too high, you might not be better off in
the end.

------
phezzan
Short version. A member of the San Jose teacher's association thinks one of
two academic studies is wrong, because... we already have a consensus.

The one point raised in the article about multi-site employers is acknowledged
by the article's favored Berkeley study: "some multi-site businesses report
payroll and head counts separately for each of their locations, while others
consolidate their data and provide information as if their business operated
only at a single location."

Oh and by the way: "This report was prepared at the request of the Office of
the Mayor of Seattle."

[http://politicalcalculations.blogspot.com/2017/06/the-
most-s...](http://politicalcalculations.blogspot.com/2017/06/the-most-
surprising-finding-of-seattle.html)

------
frgtpsswrdlame
If you'd like some real criticism of the UW study, the author of the Berkeley
one has published a letter which goes over a lot of the methodological
problems.

[http://irle.berkeley.edu/files/2017/Reich-letter-to-
Robert-F...](http://irle.berkeley.edu/files/2017/Reich-letter-to-Robert-
Feldstein.pdf)

Here's the best points, I'd say the UW study is quite problematic.

 _The UW report excludes multi-site businesses from its dataset, which removes
48 percent of Seattle’s low-paid workforce out of their study.3 This major
exclusion raises a big red caution flag about the representativeness of their
sample and therefore about the interpretation of their findings. Yet the UW
report provides essentially no evidence that their sample is representative of
all jobs in Seattle and Washington._

 _In the UW data set, workers who leave a single-site business for a multi-
site business to benefit from the higher wage mandate or because they received
a better offer are not counted in the wage gains, but are counted in jobs
lost. Seattle 's policy essentially sets a higher minimum wage for all multi-
site businesses, counting them as large employers.4 The exclusion of multi-
site businesses, which is not standard in studies that use these data, may
therefore create major biases in their results. Of course, some employees may
move from multi-site businesses to single site businesses, but this mobility
direction is likely to be smaller. It is not possible to estimate the size of
this bias without access to the underlying data._

 _The UW report focuses only on jobs that had paid less than $19, which
surprisingly is much too low. Table 3 of the UW report indicates that the
number of jobs paying under $19 in all single-site businesses fell by about
6000 between 2014 and 2016. Yet the number of single-site jobs at all pay
levels in Seattle increased by about 44,000 in the same period. This pattern
of average higher pay and more employment appears also in food services: a
decline of about 150 jobs paying under $19 from 20014 to 2016 and a
simultaneous increase of about 4,500 jobs in all pay levels at single-site
food service establishments. These numbers represents very good news:
Seattle’s pay levels and job numbers both went up, at least among single-site
businesses. We want to know, though, how much of this upgrading in overall pay
and employment at all pay levels can be attributed just to the minimum wage
policy._

 _The UW report nonetheless finds an unprecedented impact of wage increases on
jobs, ten times higher than the average in 942 published minimum wage and non-
minimum wage estimates, and triple that of minimum wage critic David Neumark_

~~~
surfmike
It would be interesting to read how many of those criticisms were addressed in
the Berkeley study itself.

------
randomfool
Thrilled that Seattle is giving this a try. Great that it's being analyzed so
other areas can learn from and improve upon.

~~~
dlp211
I just want to point out something that I heard on NPR/Public Radio on my
drive home the other night. Essentially the studies that have been done around
Seattle show that $15 was probably too high, but when it was raised to $11 it
had no noticeable effect.

Now of course, confidence in the studies matter, and I am going to assume the
worst and that these studies weren't conducted in the same manner. But if the
above holds true, the implications are immense.

~~~
aetherson
It hasn't hit $15 yet. The current studies are on the increase to $13.

The studies when it was $11 didn't show no noticeable effect, they showed
mixed effects. Basically, at $11, the studies suggested that it produced
losers and winners, and the winners slightly outweighed the losers.

------
cowpig
> It’s not entirely clear why the University of Washington team gets such a
> weird result — since their data isn’t public, we can’t check it — but it’s
> worth noting at least two important issues with their study.

I cannot understand how economic studies are supposed to be credible when the
data they use is not provided along with their methodology.

Is this for privacy reasons? If so, surely we can come up with obfuscation
standards?

------
drak0n1c
The UW researcher, Jacob Vigdor, whose research is dismissed in this article,
has responded to common criticisms in this interview:
[https://www.seattlemet.com/articles/2017/6/26/what-should-
we...](https://www.seattlemet.com/articles/2017/6/26/what-should-we-make-of-
the-uw-minimum-wage-study)

------
awinter-py
words missing from this article: 'delivery', 'outsource', 'manufacturing',
'offshore', 'manual labor'.

Seattle is the headquarters of starbucks (low-wage high-labor coffee shipped
from overseas) and amazon (manufactured goods shipped from wherever). They can
raise the minimum wage because a big piece of their economy is already
happening elsewhere.

~~~
jhall1468
That's true of almost all extremely large companies, so I'm not sure I
understand your point. Those two companies still only represent a small
portion of the entire Seattle workforce.

~~~
awinter-py
I'm not talking about the people who work at sbux/amzn, I'm talking about the
people who _don 't_ work in seattle because of import/export activity: factory
workers and coffee growers.

~~~
chillwaves
Yes, but we all buy from markets that benefit from the lower cost of other
labor markets or technology (or regulation).

~~~
awinter-py
Agreed. And that's the reason Seattle was able to raise their minimum wage
without major disruption -- not because their economy doesn't rely on cheaper
labor, but because they've outsourced it.

I'm not assigning a moral value to outsourcing, though I agree with intel
founder Andy Grove that outsourcing high tech like chip fabs can backfire
after a generation. Just making the point that raising wages is easy if cost
of living / labor deltas has already offshored part of your economy.

~~~
jhall1468
But the point is moot because whether or not minimum wage is $8.00 or $15.00
we've offshored the major aspect or our labor to other countries. You aren't
wrong, but it's moot. You're literally making an argument that we could have a
$15.00/hr minimum wage everywhere in this country because most labor exists in
China or other less developed nations.

You're right, but that's not exclusive to Seattle.

~~~
awinter-py
If the chinese economy continues to grow faster than america's (not a given),
at some point we may need to onshore those jobs again.

------
0xbear
If I'm not mistaken the new minimum wage is not yet fully implemented and
small businesses got a temporary reprieve.

As to WaPo: the new release of Google News finally lets you ban the news
sources you don't like. After removing WaPo, HuffPo, CNN and NY Times, my news
feed is borderline useful again. Thank you, Google!

~~~
s73ver
So what's the difference now between getting your news from there or from
Facebook? It sounds like Google News is going to be the same kind of echo
chamber that other news sources become :(

Please don't take this as a criticism of your chosen (or dischosen) news
sources, as I'm sure I can find someone replying to this thread who is
removing the sources you like as well.

~~~
0xbear
I don't use Facebook, so I wouldn't know. I've come to the conclusion that the
function of the media has shifted over time from reporting news to just
peddling narratives, all while also showing me irrelevant ads. So I shut off
those news sources for which narrative peddling is the primary function. I
would shut off Fox, but Google seems to not show anything from them even if
they're not in block list. My news feed now mostly consists of science/tech
and local news. I like it that way.

------
thetruthseeker1
My take away has been that it is not clear beyond doubt that higher minimum
wage is better in the long run. If both the studies had agreed that it is
better, yes, it makes sense to enthusiastically adopt it. However if studies
have results that dont match, then I think there is a reason for caution.

As far as what I understand, only Seattle adopted higher minimum wage, now
many people with that minimum wage can get services (may be not directly, but
in the supply chain) from other states which don't have the minimum wage which
can give the impression that their life has improved. However, if the whole
country adopts it, the parameters of that might be different.

I hope somebody sheds a light on wage dilution as well. If somebody was
incentivized to learn a skill that pays them 20$ an hour, will that incentive
still be there?

------
k__
I'm more of an UBI fanboi, but it seems MW is working, at least here in
Germany.

Turns out, most jobs that had wages below MW were still lucrative for the
companies even when paying 8,84€/h

------
enoch_r
This reminds me of: [http://slatestarcodex.com/2014/12/13/debunked-and-well-
refut...](http://slatestarcodex.com/2014/12/13/debunked-and-well-refuted/)

There's a complicated issue where theoretical predictions go one way and
empirical evidence is mixed. Result: everyone looks at the studies that
suggest they're right, and claims that they "debunk" the studies that suggest
they're wrong. You get to look at all the weaknesses of the studies you don't
like, and ignore the weaknesses of the studies you do like.

In this case of course the UW study was commissioned several years ago by the
city of Seattle. Then, apparently, in mid-June, _after_ seeing the results of
the UW study (but before they were publicly released), the mayor of Seattle
commissioned this second study, this time from UC Berkeley's IRLE.

(Why the IRLE? It certainly couldn't be because their previous work suggests
that they very strongly believe the minimum wage has no disemployment effect.)

The IRLE's study said the minimum wage increase had no disemployment effect.
Whew. Debunked and well refuted!

Just for fun, you can use this handy guide to see which study has been
refuted:

\- if you want the minimum wage to increase, then excluding multi-location
businesses from their analysis obviously damns the UW study, and proves that
their results can be ignored.

\- if you don't want the minimum wage to increase, then including only food-
service jobs in their analysis obviously damns the Berkeley study, and proves
that their results can be ignored.

~~~
cwyers
> In this case of course the UW study was commissioned several years ago by
> the city of Seattle. Then, apparently, in mid-June, after seeing the results
> of the UW study (but before they were publicly released), the mayor of
> Seattle commissioned this second study, this time from UC Berkeley's IRLE.

That's what really bugs me. They commission the UW study, they see the
results, and then they commission this other study hurriedly to release six
days before the UW study. If you keep asking the question until you get the
results you want, you're going to get the results you want.

------
cwyers
This is a hack job, an out-and-out piece of propaganda trying to dismiss a
study the author doesn't like the conclusions of.

> First, their data exclude workers at businesses that have more than one
> location; in other words, while workers at a standalone mom-and-pop
> restaurant show up in their results, workers at Starbucks and McDonald’s
> don’t.

The UW report actually discusses this:

> Multi-location firms may respond differently to local minimum wage laws. On
> the one hand, firms with establishments inside and outside of the affected
> jurisdiction could more easily absorb the added labor costs from their
> affected locations, and thus would have less incentive to respond by
> changing their labor demand. On the other hand, such firms would have an
> easier time relocating work to their existing sites outside of the affected
> jurisdiction, and thus might reduce labor demand more than single-location
> businesses. Survey evidence collected in Seattle at the time of the first
> minimum wage increase, and again one year later, increase suggests that
> multi-location firms were in fact more likely to plan and implement staff
> reductions. Our employment results may therefore be biased towards zero.

It's irresponsible to criticize the report for not including multi-site
employees without mentioning the conclusions of this survey data.

> Second, the University of Washington team does not present enough data for
> us to assess the validity of its “synthetic control” in Washington — that
> is, the set of areas to which they compare the results they observe in
> Seattle.

The synthetic controls are probably the most complicated part of the report,
and the part that seems the most open to criticism. But the UW report used two
different controls for for changes in employment, and both of them lead to
similar conclusions about the effects of the minimum wage. It's possible that
there are other synthetic controls that yield different results. The WaPo
article says that the "Berkely researchers take a better approach" to
synthetic controls, but doesn't note that the UW study can't use that approach
because the data that enabled the UW study isn't collected nationally.

Also, saying "the new studys' findings are out of step with a large body of
research" ignores that the UW paper duplicated the findings of that large body
of research, and discussed how the more expressive dataset they had (being
able to actually identify low-income workers instead of using a proxy like
"restaraunt workers" or "teenagers" is the biggest difference between this and
other studies) leads them to different conclusions. And saying the UW study
has "important limitations," but not saying the same thing about the Berkely
study, which was only able to look at workers in one sector (restaraunts), is
a pretty clear indicator of where the author's sympathies lie.

------
exclusiv
Some considerations of the minimum wage movement:

1) The higher it gets the more likely and quicker the minimum wage jobs will
be replaced by AI/robots/automation.

2) The cost gets passed on to the consumer. So if everything costs more and
everyone is paying more in taxes, that's not good either. Some companies may
keep prices the same and take from profits, but the lower the margins, the
less attractive creating and running a business becomes.

3) What works in one area like Seattle won't necessarily work across the
country. There has to be a sweet spot in each area and we have to be honest
with ourselves to say that the feel-goodness of a higher minimum wage does
have its limits. And that limit is what we are debating. We don't need to do a
study to know that a $50/hr minimum wage is unreasonable.

In any given city, what minimum wage provides fairness for individuals,
businesses AND the local economy as a whole? And how can we develop a model
framework for cities across the country to use?

~~~
openasocket
Except it's already like that. If we don't pay workers a living wage they have
to use our social safety net programs, such as food stamps. Those programs are
funded by the tax payer. So basically the tax payers are already subsidizing
companies like Walmart so they don't have to pay a full living wage to their
employees. If those companies paid them a full wage the taxpayers would pay
less for social welfare programs. I'm also not that sympathetic to the plight
of companies like McDonald's when it is earning in excess of $4B in profit in
a year.

Obviously, what counts as a fair wage will depend on the local cost of living.

~~~
exclusiv
That's a good insight. I agree with that point and think every city should
propose laws that support a living wage. We just need to understand what that
living wage should be in any given city and consider a variety of factors,
some short term and some long term.

> If those companies paid them a full wage the taxpayers would pay less for
> social welfare programs.

Maybe. That assumes the poverty line stays the same and nothing happens with
the price of other goods those minimum wage earners need to buy. It also
assumes there's no impact on 1) number of jobs and 2) number of hours and thus
total income as the UW study discusses.

As long as part time employee is allowed you cannot guarantee an income for
any given job. So a min. hourly wage doesn't definitively solve the problem of
mandating a fair wage as we are discussing.

> I'm also not that sympathetic to the plight of companies like McDonald's
> when it is earning in excess of $4B in profit in a year.

Me either. But McDonalds has already shown a long time ago that they can
eliminate min. wage jobs and/or hours by getting consumers to throw away their
trash and fill up their own drinks. This is part of the consideration #1 I
mentioned.

------
bedhead
The minimum wage is always $0

~~~
lordnacho
Unpaid interns effectively pay transportation and other associated costs. I've
always insisted on paying a little bit to kids who come in to shadow us, and
something a bit more substantial for kids who actually sit and do useful work.

------
paulMageau
Very confused wapo published this
[https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...](https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-
study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-
workers/?utm_term=.505244cd285a)

~~~
dragonwriter
Publishing analysis/perspective/opinion pieces with different spin on the same
underlying news isn't uncommon in publications that aren't simple ideological
propaganda mills.

------
cybernytrix
I feel one of the real issues is incentivizing publicly traded companies to
beat pressure from Wall street to keep cutting costs and workers be damned
attitude. It might be worthwhile to experiment $30 per hour wages for all
publicly listed and big companies, including temp workers. Overall it is
better for someone to work 4h at $30 instead of 8h at $15.

------
Overtonwindow
Next week there will be a study refuting the MIT study, then another refuting
that study, back and forth. It seems no matter the study academia publishes,
and how much it is lauded for its clarity, breadth, and quality, another study
will come along ripping it to shreds that another group will heap praise upon.

~~~
CobrastanJorji
You're saying that like it's a bad thing, but so long as each new study is
honest criticism of the previous study or brings new information to the table,
that sounds like exactly how big questions like this should be handled.

~~~
Overtonwindow
Fair point. I don't mean it to sound like a bad thing, but I understand and
accept that research and science can be bought. For every study supporting
something, another study could be done that refutes it. Especially in such a
politically charged atmosphere and issue, it gets hard to trust one source
over the other. I trust the MIT study more than the UW study, but someone else
probably has the completely opposite viewpoint.

------
dpatru
The average home price in Seattle is over $670,000.[1] This requires a salary
of $182,000 per year [2] or $87.50 dollars per hour. At $15 per hour, a full-
time worker cannot afford a house in Seattle. Therefore, to avoid the
injustice of a homeless, full-time worker, the minimum wage should raised to
at least $87.50 per hour.

[1] [https://www.zillow.com/seattle-wa/home-
values/](https://www.zillow.com/seattle-wa/home-values/) [2]
[https://www.redfin.com/how-much-house-can-i-
afford?utm_sourc...](https://www.redfin.com/how-much-house-can-i-
afford?utm_source=google&utm_medium=ppc&utm_campaign=1001260&utm_term=kwd-37027506043&utm_content=115419081140&adgid=19054547780)

~~~
epistasis
$670,000 is the average home price, not the minimum home price, so you're
chasing the wrong goal.

I would also argue that chasing home ownership for everyone, in a city, is the
wrong goal. I don't care about owning a home, I care about saving for
retirement, and living in a home that's adequate for my family. Home ownership
is great for some, I encourage it, but let's not pretend that it's the only
way to live.

------
Karunamon
_Until you start seeing low-income people in Seattle and around the country
taking to the streets to demand lower minimum wages, don’t listen to anyone
who tries to tell you otherwise._

The article ending on this note kind of soured the whole thing. The average
person will be perfectly okay with higher wages so long as they don't take
into account things like inflation and other knock-on effects - and most
won't, because those effects are subtle over time.

The money's gotta come from somewhere at the end of the day. And if the
company doesn't want to or can't raise prices (franchises are especially hit
by this, since a lot of their pricing flexibility is dictated by a corporate
office), the next thing to be cut will _always_ be labor.

~~~
michaelmrose
Companies only hire enough labor to service their need to start with. They
either will already cut labor or the can't and still profit.

If minimum wage labor is 20% of your costs and it increases in price by 50%
prices you can make up the difference by increasing prices by 10%

~~~
j4kp07
> you can make up the difference by increasing prices by 10%

LOL. Beautiful. Just beautiful. With no insight what so ever into the profit
margins for a business, you've managed to solve all the Corporate world's
problems. LMAO!

~~~
michaelmrose
Its obviously an oversimplification. In fact 20% of gross costs being minimum
wage labor is arbitrary and high as is an increase in minimum wage by 50%.

The point was to demonstrate that even in the case of a massive sudden
increase in the minimum wage in an industry where unskilled labor makes up a
pretty damn big portion of costs that the price increase that would pay for
100% of that pay increase was comparatively quite modest.

For example McDonald's is almost the quintessential low skill job and a McDs
franchise can easily pay 20% of its costs to labor. In fact the average
mcdonalds employee is paid $10 an hour.

Raising rates is one option, accepting lower margins is another if your
margins are such that you can keep the doors open. Slashing labor as you have
suggested is an unreasonable suggestion because the relationship as stated
above isn't linear. In order to make up for labor going up by 50% you would
have to slash your labor hours by 33% which is unsustainable.

Basically the gist of the matter is that I don't possess nor claim specific
insight into a particular business in this post.

I'm saying that elementary school math can show that slashing labor is an
unreasonable reaction that nobody will do because they when faced with the
same scenario will be fully capable of doing the math.

I'm not here to solve all the corporate worlds problems I'm here specifically
to refute your post.

------
theprop
"There's lies, there's damned lies, and then there's statistics..." Mark Twain

------
paulMageau
Very confused wapo published this:
[https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...](https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-
study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-
workers/?utm_term=.505244cd285a)

------
kartD
Frankly, I'll be happy when the US gets out of this mandatory tipping culture
BS.

~~~
exclusiv
Seriously. If a restaurant cannot pay a fair wage they shouldn't exist.

~~~
kartD
Yes, please charge me higher menu prices. I shouldn't be responsible for your
employees livelihood

------
ableton
A lot of people are getting fired due to increased minimum wage. The employers
will take their money and pay it to you and me to build automated solutions
that do what the now-too-expensive people once did. That's what McDonalds is
finally doing with self-order kiosks.

------
Shivetya
5000 fewer jobs, not in the article is it?

------
cartercole
the min wage hurts low skilled workers. period.

------
jackweirdy
Didn't realise so many HN commenters were anti-minimum-wage

~~~
exclusiv
I don't think that's an accurate statement. I think it's more about what level
is optimal for an area and how we determine it.

------
dmccunney
Whether any government mandated minimum wage boost "works", depends upon who
you are. Who benefits from it?

If you are currently _in_ a minimum wage job, you _may_ benefit. You're making
more money, because the government says so! (But your employer might just
decide wage costs are too high and lay you off...)

If you are unemployed and _looking_ for a minimum wage job, the bar just got
raised. The higher the minimum wage is set, the harder employers look at how
badly they need the work done. The job they might be willing to pay $10/hour
for might not be _worth_ $15/hour to them. Your quest to _get_ a minimum wage
job just got harder.

And if you are willing to _accept_ less money, because some money is better
than none, it doesn't help you, because employers aren't legally _permitted_
to pay you less, even if you would be happy to accept it. So you likely get a
substantial underground economy of "off the books" employees, getting paid in
cash that doesn't get reported to the government. And those folks may actually
take home _more_ than minimum wage employees because taxes don't get deducted
from their wages.

(I live in the NY metropolitan area. I see a lot of that. And there are
employers who would _pay_ the higher minimum wage, but the employees don't
_want_ to be on the books. Many are undocumented aliens, and being on the
books leaves a trail pointing to them and possible deportation.)

If you are the government that mandated the higher minimum wage, you might not
benefit financially, because the amount of taxes you see is less than what you
might see if minimum wage was lower and more people _had_ minimum wage jobs.
(Of course, for government who do this, it's about getting votes, and impact
on tax revenue isn't a consideration.)

And bear in mind that what the employee gets in a minimum wage job is rather
less than what the employer has to spend. The employer must deduct and remit
taxes, and must maintain the appropriate records for legal purposes, and that
costs money.

Ultimately, "it takes two to tango". There must be workers looking for minimum
wage jobs, and employers offering them. The government can't require employers
to hire workers they don't need, and increases in minimum wage will tend to
decrease the number of minimum wage jobs available.

Ultimately, minimum wage increases have the effect of decreasing _total_
employment, but this seems to get missed in such discussions.

The goal of minimum wage increases is to insure workers can make a survivable
income. But value is relative - something is worth what someone else is
willing to pay for it, and that includes the worker's labor. Minimum wage jobs
are minimum wage for a reason. They are low skilled/unskilled labor, and what
the worker does simply isn't worth that much to those who need it done. What
the minimum wage folks need is to be able to acquire the knowledge and skills
that are worth more to employers and be able to get better jobs. Increases in
minimum wage by themselves don't aid that.

We are seeing all sorts of commentary elsewhere about job losses to
automation. The only reason many minimum wage jobs still exist is because it's
more expensive up front to automate them than employers want to spend. At some
point, minimum wage boosts might just make it worth the employer's while to
spend the money needed to automate those jobs. Then what do the job seekers
do?

------
mmmpop
The existence of this Washington Post article was determined yesterday by the
existence of an article critical of Seattle's minimum wage in the Wall Street
Journal. Andrey Markov is sleeping soundly in his grave.

~~~
OrwellianChild
Conspiracy theories aside, WaPo published the initial release of the working
paper yesterday (June 26) with a favorable headline: A ‘very credible’ new
study on Seattle’s $15 minimum wage has bad news for liberals [1]

[1]
[https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-s...](https://www.washingtonpost.com/news/wonk/wp/2017/06/26/new-
study-casts-doubt-on-whether-a-15-minimum-wage-really-helps-workers/)

------
wonder_bread
Welcome to the modern news cycle, where alternative realities are only a click
away! Sit back and enjoy your daily deluge into the fantasies of some revenue-
pressured writer seeking to capitalize on the latest zeitgeists us citizens
consume each day as if they are fact.

~~~
dailyrorschach
It's a column/opinion not an article, an not from someone on staff at the
Washington Post.

------
alacombe
WaPo is being contradicted by a recent report from the National Bureau of
Economic Research...

[https://evans.uw.edu/sites/default/files/NBER%20Working%20Pa...](https://evans.uw.edu/sites/default/files/NBER%20Working%20Paper.pdf)

"Using a variety of methods to analyze employment in all sectors paying below
a specified real hourly rate, we conclude that the second wage increase to $13
reduced hours worked in low-wage jobs by around 9 percent, while hourly wages
in such jobs increased by around 3 percent. Consequently, total payroll fell
for such jobs, implying that the minimum wage ordinance lowered low-wage
employees’ earnings by an average of $125 per month in 2016"

~~~
mikestew
_WaPo is being contradicted by a recent report from the National Bureau of
Economic Research..._

I typically avoid this, as the HN guidelines specifically say not to, but you
didn’t read the article, did you? I say this only because the WaPo article, by
my reading, is a direct response TO THE VERY ARTICLE YOU REFERENCE.

