Study on Seattle minimum wage shows relative success

by: Natasha Chen Updated:

SEATTLE - A University of Washington study shows that the first nine months under Seattle’s minimum wage ordinance has successfully raised wages and kept businesses in Seattle.

The study examined 27,000 low-wage workers in Seattle, but did not include any non-profit workers or independent contractors. A study on non-profit work will be released this fall. Independent contractor data will have to be requested from the IRS, which may come a few years later.

The study’s goal was to look at:

  1. How Seattle’s job market has been since the ordinance took effect
  2. How much of that change was due to the minimum wage ordinance

A presentation to the Seattle City Council Monday morning showed that the number of people making below $11 an hour drastically decreased, which was what the ordinance had intended.

Researchers said while the 2015 economy was strong, the minimum wage itself is responsible for about an average increase of $0.73 an hour for low-wage workers.

They also said that on average, these workers got access to 12 more hours of work per quarter than they did before the ordinance. However, when comparing to a similar market, other workers got access to 16 more hours per quarter.

Seattle workers earned $72 more per quarter, which is above what workers in similar markets earned.

At the same time, Seattle workers were 3.3 percent less likely to stay in the city for work.

Researchers predicted that may be because some employees transitioned into independent contract work, or because some employers may be switching to pay workers under the table.

“This is exactly what we expected. So what we would have expected is the wage would increase, that the earnings would be a little bit ambiguous – because you’d say some reduction in hours and some reduction in rates of employment – so they matched about exactly what we would expect,” said Mark Long, a University of Washington professor of public policy and governance.

Logan Horn, an 18-year-old student who works part-time in retail, said she is grateful for the higher pay. But she also sees trends at her job that match the data.

“I know where I was working, we hired a lot more people and gave them a lot fewer hours. So we really had to fight to keep our hours the same. A lot of people ended up leaving and working outside of Seattle,” Horn said.

As for businesses, the study shows a slightly higher rate of turnover in Seattle, but the difference from a typical year is small.

Long said in a typical year, 18 percent of Seattle businesses will close. In 2015, the closure rate was 0.7 percent lower. In similar markets, that closure rate was even lower during that time.

The executive summary of the study states: “If there has been any increase in business closings caused by the Minimum Wage Ordinance, it has been more than offset by an increase in business openings.”

Councilmember Tim Burgess said during the presentation that the trends looked promising.

“The sky is not falling,” Burgess said, “and neither is the ceiling.”

Long cautioned that this data is only from the first nine months and that bigger trends may come down the line.

“This is the early phase-in period. So any effects we find at this point could be different when we see the wage increased again to $13 an hour,” he said.

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