
Seattle's Painful Lesson on the Road to a $15 Minimum Wage - guildwriter
https://www.bloomberg.com/view/articles/2017-06-26/seattle-s-painful-lesson-on-the-road-to-a-15-minimum-wage
======
dang
[https://news.ycombinator.com/item?id=14637873](https://news.ycombinator.com/item?id=14637873)

[https://news.ycombinator.com/item?id=14642828](https://news.ycombinator.com/item?id=14642828)

[https://news.ycombinator.com/item?id=14645866](https://news.ycombinator.com/item?id=14645866)

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djsumdog
The State of Victoria (Australia) had a $14.50 minimum wage when I lived
there, and most baristas and servers I knew wouldn't take jobs that paid less
than $20. It's important to note that's the entire wage as AU doesn't really
have a tipping culture. Melbourne has been voted 'most livable' city multiple
times.

Seattle's situation is much more complex. Condos are going up and ST3 is
funded, but the city needed that rail system a decade ago. The biggest problem
in Seattle, as is the Bay Area, is growing income inequality.

When the fishing industry grew in Seattle, so did local shops, bars, hotels
and all the other industry that gets paid various wages across the board to
support each other. Seattle is a tech capital, and those jobs are very high
demand. People in tech often get paid more than lawyers and even doctors.

I remember a lawyer telling me very few of the police he's met live anywhere
near the areas they work in. People who bought houses decades ago for $150k
are watching their neighbours take buyouts and leave, selling their places for
$800 to over a million.

The disproportionate amount of income given to those in high demand fields
hurts everyone else across the board. Seattle is building a lot more housing,
unlike the bay area, but there is still a considerable amount of single
occupancy housing in the city that's empty simply because the owners won't
sell it or bring it up to code.

It's more than just minimum wage. There are a lot of complexities in that city
where you can't just focus on a couple of numbers.

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marcoperaza
The push for a national $15 minimum wage is so unhinged from reality, yet so
politically popular, that it's terrifying. People living in coastal America
just don't realize that they'd essentially be banning work in large swaths of
the country. An hour of work simply isn't worth $15 in many places. Those
places also have very low costs of living.

If a $15 minimum wage was imposed nationally, these communities would collapse
and you'd simply have millions of additions to the ranks of urban poverty.

~~~
vorotato
That's a very convincing argument but do you have any evidence to back up
those claims?

~~~
marcoperaza
Just my own experience traveling through America. Go to a small mountain town
and look at the prices in the restaurants and supermarkets, and the local real
estate. There's no way that enough money is flowing to pay everyone $15/hour,
nor do you need that much to live there.

I do wish I had something more rigorous to give you. I am pretty sure I am not
the first to make this argument though.

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ChristianBundy
This study is really, really, really bad. Here's an analysis:

[https://www.washingtonpost.com/news/posteverything/wp/2017/0...](https://www.washingtonpost.com/news/posteverything/wp/2017/06/27/seattles-
higher-minimum-wage-is-actually-working-just-fine/)

~~~
smsm42
Ben Spielberg, a Teach For America alum and former member of the Executive
Board of the San Jose Teachers Association, works on issues related to
inequality, economic opportunity, and full employment with Jared Bernstein at
the Center on Budget and Policy Priorities.

So he's not an economist, not a statistician and is a political activist
having an agenda that this study seems to undermine. I don't have enough
knowledge in statistics and econometrics to know which team did better job -
Berkeley or UW - but if I had to choose, I would certainly not make the choice
based on a word of a political activist without relevant background.

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ubernostrum
Genuinely curious: if employers are simply cutting back hours to save paying
the extra wages, what's happening with those hours that aren't staffed
anymore?

One possibility is that the businesses were already overpaying for labor by
staffing more employees for more hours than were needed. But that just turns a
minimum-wage hike into a convenient excuse to roll back hours/staff (much as
economic downturns tend to be used as a cover for companies to lay off people
they no longer needed anyway).

Another possibility is that more hours are being assigned to salaried
employees since it doesn't cost extra to have them work more. But that would
actually be a _good_ thing -- it would increase the demand for salaried full-
time employees, and being a salaried full-time employee is much better than
being a minimum-wage hourly employee.

Another possibility is that businesses are just closing down more often rather
than pay people to keep things operating. But that seems unlikely.

So what's actually happening?

~~~
0x27081990
It's a pricing system. When prices go up, you only pay it if you really need
it. How much are you willing to pay for having someone washing your dishes at
home?

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0x27081990
Economists have been warning this for more than decades[1]. There are
extensive studies about it. There are even former Marxists who talked about
it, like Thomas Sowell[2]:

>Sowell has said that he was a Marxist "during the decade of my 20s"; one of
his earliest professional publications was a sympathetic examination of
Marxist thought vs. Marxist–Leninist practice. His experience working as a
federal government intern during the summer of 1960 caused him to reject
Marxian economics in favor of free market economic theory. During his work,
Sowell discovered an association between the rise of mandated minimum wages
for workers in the sugar industry of Puerto Rico and the rise of unemployment
in that industry. Studying the patterns led Sowell to theorize that the
government employees who administered the minimum wage law cared more about
their own jobs than the plight of the poor.

Why do almost everybody think they can go against the laws of economy?

[1] 50 Years of Research on the Minimum Wage:
[https://www.jec.senate.gov/public/_cache/files/c876c468-ffca...](https://www.jec.senate.gov/public/_cache/files/c876c468-ffca-47ed-9468-7193d734bde9/50-years-
of-research-on-the-minimum-wage---february-15-1995.pdf)

[2]
[https://en.wikipedia.org/wiki/Thomas_Sowell#Education_and_ca...](https://en.wikipedia.org/wiki/Thomas_Sowell#Education_and_career)

~~~
WaxProlix
Minimum wage isn't really Marxist afaik, and people go against 'laws' of
economy because they aren't laws in the same sense that say, thermodynamics or
gravity seem to be. We have trends that arise out of messy and massively
complex systems, and people feel free to believe that whatever variables were
at play in some other situation aren't in theirs.

Edit: This is aside from any opinion about how good or bad the content of the
article is, just pointing out why I think people are increasingly okay with
ignoring economists' opinions.

~~~
0x27081990
>Minimum wage isn't really Marxist afaik

That's correct, but current Marxists or people who claim to be left-wing
always make it a top priority issue to increment the minimum wage.

~~~
vorotato
I don't really understand why capitalists think they can continue to pay
people the same amount in the context of increased efficiency. Profits are
higher than ever but the public doesn't see a dime of it. Surely it will have
negative impacts on consumption down the road.

~~~
0x27081990
Higher profits aren't a bad thing. Higher profits mean higher taxes paid,
higher profits also mean more money put into work (personal investments or by
third parties, i.e. put in a bank and the bank makes their own investments or
loans it). Higher profits means wealth is being generated. Contrary to popular
belief, minimum wage does not distribute wealth, but rather excludes those who
have less, therefore helps accumulating wealth.

Minimum wage jobs aren't meant to be a job for life. It's an entry level job.
If you want higher paid jobs, you need to earn it. Minimum wage increase
causes unemployment, you end helping a few at the expense of others who happen
to need help the most.

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blacksqr
Every prediction of doom from minimum wage hikes has failed to come to pass
[1], yet the anti-minimum wage dead-enders advance ever more tendentious,
hair-splitting and arcane justifications for why minimum wage increases are
"bad news."

A policy that has the effect of transitioning the economy from low-skill low-
wage jobs to more high-skill high-wage ones ought to be celebrated among human
beings as a victory. It provides an incentive for workers to improve their
skills to compete more effectively and meaningfully increase their income.

Only those who outright prefer a serf economy can describe this study as a
negative for Seattle.

[1] [https://civicskunk.works/moving-the-goalposts-on-seattles-
mi...](https://civicskunk.works/moving-the-goalposts-on-seattles-minimum-
wage-43261b19ee63)

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erentz
Hmm they want me to pay to read the paper. But I have many questions, e.g. how
do they know this wouldn't have happened anyway. Was there an increase in the
number of worked hours being classified as non low wage, and is that why less
hours worked were classified low wage, etc.

But ultimately minimum wage laws are based more on ethics than anything. I've
not heard of any business going out of business because of this in Seattle. I
doubt there are any. This city is ridiculously expensive to live in. I want
the people serving me food, etc. to be able to afford to live here. $15 per
hour doesn't go far enough, but in lieu of something more dramatic it's the
least we can do.

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

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IanDrake
If I were an employer hiring minimum wage workers in Seattle, I'd be looking
to dump my employees worth $10/hr and hire some worth $15.

Assuming my ability to raise prices is capped due to out of city competition,
then my only choice is to do more with less, which means hiring more
productive workers.

To me, that means hiring better people. People who don't need training, can
multi-task, who can deal with having more work than time.

So, sorry kid looking for your first job, I just hired someone from outside
the city who was making $15 an hour because they where worth it. I can't
afford to train you anymore.

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checkdigit15
This is another dupe of the discussion at
[https://news.ycombinator.com/item?id=14637873](https://news.ycombinator.com/item?id=14637873)

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notadoc
Interesting, perhaps not too surprising with some lines of work.

I'd be interested to know how it has impacted broader economic activity in the
region.

~~~
snarf21
To me the more interesting questions are around other workers and buying
power. Does this devalue wages of the $20/hour EMT that went to a technical
school for 2 years? Have prices gone up in relation to this wage increase or
are businesses just cutting hours (service levels) to compensate? If prices
are rising because of this, does this decrease the buying power of these
minimum wage workers since they are likely to shop and patron many business
that also employ these minimum wage workers?

~~~
notadoc
It's also challenging to consider because housing inflation in Seattle (and
the west coast in general) has gone absolutely haywire for years now, often
20% a year or more in some cases.

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oh_sigh
Will this put even a slight dent in the zeal of the $15 minimum wage folks?
Their platform was not based on any kind of economic analysis to begin with,
so I suspect that additional data in that field will not affect their desire
to see this pushed through.

~~~
SBArbeit
It won't put a dent in mine. I live in Seattle, I'm seeing the effects of
economic growth here, and getting to a minimum wage that's inflation-adjusted
still makes a ton of sense.

From [1]: "Our results show that wages in food services did
increase—indicating the policy achieved its goal — and our estimates of the
wage increases are in line with the lion’s share of results in previous
credible minimum wage studies. Wages increased much less among full-service
restaurants, indicating that employers made use of the tip credit component of
the law. Employment in food service, however, was not affected, even among the
limited-service restaurants, many of them franchisees, for whom the policy was
most binding. These findings extend our knowledge of minimum wage effects to
policies as high as $13."

[1] [http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-
Ex...](http://irle.berkeley.edu/files/2017/Seattles-Minimum-Wage-
Experiences-2015-16.pdf)

