Study reveals workers earn less after minimum wage hike

[Boiler 47,495]

Like New York, Seattle is steadily increasing the minimum wage to $15 an hour.

The analysis, conducted by the University of Washington, said Seattle’s most recent increase to $13 per hour increased pay in low-wage jobs by 3 percent since 2014.

But the change also resulted in a 9 percent reduction in hours worked, leading to an overall 6 percent pay drop — offsetting the benefits of the pay hike.

The study estimated that the typical low-wage worker in that city lost $125 a month.

Analysts said the wage hike cost Seattle at least 5,000 jobs.

 

http://nypost.com/2017/06/26/study-reveals-workers-earn-less-after-minimum-wage-hike/

[jg121783 3,921]

Some of us warned that this would actually cause people to lose jobs and have hours reduced but the social justice warriors thought they knew better and didn't want to listen. Its not rocket science that when a business has to pay more per hour for their employees they are going to look for ways to cut the amount of hours worked and the amount of employees they have. Or in extreme cases relocate their business completely. Those of us who live in the real world understand that. Those who live in a socialist utopia fantasy land can't grasp that concept and their delusions just cost people jobs.

[CaliCat 3,957]

There is a lot of speculation, and the authors of the paper were honest in their disclaimer, reproduced below, from the link provided in the initial post.

 

A few cautions should be noted. Our analysis is restricted to firms reporting employment at specific locations, as we cannot properly locate employment for multi-location firms that do not report employment separately by location. It may be the case that the labor demand elasticity of single-site firms is larger than that of multi-site firms who do not report employment at specific locations. Yet, as discussed above, multi-site firms who we surveyed were more likely to self-report cuts in employment than smaller firms.46 Further, we lack data on contractor jobs which get 1099 forms instead of W-2s and on jobs in the informal economy paid with cash. If the Ordinance prompted an increase in low wage workers being paid as contractors or under the table, our results would overstate the effect on jobs and hours worked. However, such a move would not be without consequence for the workers, who would lose protections from the Unemployment Insurance and Worker’s Compensation systems and not receive credit toward future Social Security benefits for such 46 If we ignore our survey evidence and suppose that multi-site firms' wage impact was the same as reported here but their hours impact was zero, the elasticity would still be high compared to earlier work – around -1.9 (as single-site businesses employ 62% of the workforce). 38 earnings (though they would not have to pay the full amount of taxes for Social Security and Medicare). In addition, some employers may have shifted jobs out of Seattle but kept them within the metropolitan area, in which case the job losses in Seattle overstate losses in the local labor market. Reductions in payroll attributable to the minimum wage may exceed reductions in income for the affected workers, to the extent they were able to take advantage of relocated opportunities in the metropolitan area. Finally, the long-run effects of Seattle’s minimum wage increases may be substantially greater, particularly since subsequent changes beyond a final increase to $15 per hour will be indexed to inflation, unlike most of the minimum wage increases that have been studied in the literature, which have quickly eroded in real terms (Wolfers, 2016). One cannot assume our specific findings generalize to minimum wage policies set by other localities or at the federal or state level. The impacts of minimum wage policies established by other local governments likely depend on the industrial structure, characteristics of the local labor force, and other features of the local and regional economy. Last, there may be important forms of effect heterogeneity across workers. Some workers may well have experienced significant wage increases with no reduction in hours; others may have encountered significantly greater difficulty in securing any work at all. From a welfare perspective, it is critical to understand how this heterogeneity plays out across low-skilled workers in varying life circumstances. Such an exploration is beyond the scope of this paper, which uses a data resource that identifies no pertinent information about individual workers. Future work will take advantage of linkages across administrative data resources within Washington State to understand how the minimum wage affects workers in varying demographic categories, or with a history of reliance on means-tested transfer programs.

[jg121783 3,921]

My point still stands. When you raise the minimum wage this much businesses will start cutting hours, laying people off and in extreme cases relocating. When you are forced to pay someone a wage that doesnt align with the market value of the good being produced or service being rendered by the employee that isn't a sustainable business model and something has to give. That's just common sense.

[CaliCat 3,957]

In some cases it may be true, but not across the board. 

[Dashinka 25,885]

32 minutes ago, CaliCat said:

In some cases it may be true, but not across the board. 

You can't legislate supply and demand.

[CaliCat 3,957]

2 minutes ago, Bill & Katya said:

You can't legislate supply and demand.

 

You can't stop the beat.

 

 

[OriZ 3,165]

Nothing to see here. Move along people 

[Amica Nostra 4,803]

5 hours ago, jg121783 said:

My point still stands. When you raise the minimum wage this much businesses will start cutting hours, laying people off and in extreme cases relocating. When you are forced to pay someone a wage that doesnt align with the market value of the good being produced or service being rendered by the employee that isn't a sustainable business model and something has to give. That's just common sense.

Seeing how most folks working for less than 15 an hour are piecing together several part time  jobs...in that sense it helps them because every hour counts for more.   I dont want to see small mom and pops get hurt but the rent and cost of living in Seattle has to be a bit chunk of what is making it tough as well

[Dashinka 25,885]

10 hours ago, OriZ said:

Nothing to see here. Move along people 

You forget, the socialists believe they can control personal incentive and disincentive relative to economic behavior with no negative unintended consequences.