Did The Seattle Minimum Wage Increase Cause Economic Ruin? 3 Facts About That.


Are residents — and businesses — of Seattle doomed?

It’s been over a year since the raises in Seattle’s minimum wage began, and they’re headed toward $15/hr in the metro area ($13.00 an hour as of 4/16). Gloom and doom was predicted by some employers, some news media “experts,” and by parts of our society that favor the 1%. When the raise was passed, the calamity-sayers came out of the woodwork.

Guess what? There’s been an ongoing study led by the University of Washington about the effects, and here’s the short version of what the team found:

“Our preliminary analysis of grocery, retail and rent prices has found little or no evidence of price increases in Seattle relative to the surrounding area.”

Here’s 3 takeaways from the full study:

  1. Prices remained largely the same for goods and services at businesses covered by the raises. One exception was restaurants, which raised prices slightly (7% to 9%) – similar to increases in surrounding cities which did not raise the minimum wage. Some Seattle owners even got creative and found other ways to cut expenses, like closing during slow times. Smart, eh?
  2. Rent and gasoline? Stayed the same. This was a big concern when the raise was passed: Would it increase expenses for the very people who just got a raise? The answer is no.
  3. Some store owners told researchers they couldn’t raise prices because of good old-fashioned competition from fellow business owners. In other words, capitalism itself, in this case, prevented prices from increasing.

Seattle is likely more economically sound than other parts of the country (and thus, more likely to sustain this kind of minimum wage increase), but we’re about to have even more data points since California and New York have passed similar measures, and it will also take them at least a few years to get to $15 (though New York limited the raise outside the metro NYC area to $12.50/hr.)

Studies have shown that better-paid workers, especially those with health insurance, are happier and better at their jobs, which means happier customers and higher profits.

And they don’t leave employers nearly as quickly. Just look at Costco.

It will be some time before we see these effects in Seattle, but the evidence is promising.

Life at minimum wage can be rough no matter where you live, but it’s especially challenging in larger cities where the cost of living is much higher. Raising the minimum wage goes a long way to helping those who have to depend on subsidized housing, food stamps, and subsidized health care (if they have it at all) become self-sufficient.

At this point in our history, it’s become an issue of human rights that will define a good chunk of our political landscape for many years to come.

Featured Image Creative Commons licensed via Flickr.

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