An expert on economic policies says a study on Seattle's minimum wage should serve as a reminder of an important trade-off.
While Seattle's $15-an-hour minimum wage has boosted pay in low-wage jobs, researchers at the University of Washington say there's also been a nine-percent reduction in hours worked. Moreover, researchers say there would be about 5,000 more low-wage jobs in Seattle without the $15-an-hour minimum wage.
"I think this is sort of the evidence that we've been seeing over time about minimum wage hikes," responds Aparna Mathur, resident scholar in economic policy for American Enterprise Institute. "Tons of studies find that if you set a higher minimum wage, yes, there are people who benefit [but] there are people who lose out – and I think it's important to realize that there is that trade-off."
Seattle was one of the first U.S. cities to adopt a $15 minimum wage law, and its experience is being closely watched as other cities have followed suit and as advocates push for a higher federal minimum wage. The city's law is raising the minimum to $15 for all businesses by 2021.
Earlier this month, economists at the University of California-Berkeley found a similar minimum wage in their city raised pay without hurting jobs in the restaurant industry. An author of that report, Michael Reich, criticized the University of Washington team's methodology.
"I think there is a common-sense argument that all economists would agree upon," adds AEI's Mathur, "which is that having a higher wage is likely to lead to some negative effects on employment – and you're lucky if you keep your job and have your higher earnings."