Not much is more important in America just now than intellectual integrity, loyalty to the truth — and a willingness to modify one’s conclusions in response to evidence.
With that in mind, let us salute a team of researchers, mainly from the University of Washington, who, in a new study of Seattle’s minimum-wage hikes, frankly admit that their latest findings contradict their earlier ones — and make the outcomes of mandatory wage increases look more positive.
Like these researchers, I’ve voiced doubts in the past about the wisdom of large minimum-wage increases, and those worries persist. But I’ve promised readers here in Minnesota, where minimum rises are being implemented and debated, that I’d keep an eye on the many interesting “natural-experiment” studies taking place as U.S. communities near and far aggressively raise the wage floor for our least-skilled and least-experienced workers.
In April, I described a paper from Census Bureau researchers that delivered favorable news to minimum-wage advocates. Now, from Washington state, there’s more.
The Seattle Minimum Wage Study Team is embarked on an extended series of number-crunching expeditions as that city boldly elevates its pay minimum in phases. It has risen from below $10 an hour in 2015 to at least $15 now, on its way to $18 by 2025.
In earlier reports, the team found, in essence, that Seattle’s low-wage workers’ net, bottom-line incomes hardly rose at all as a result of the early hikes. That was because their work hours appeared to decline enough to cancel out virtually all of their higher pay.
But the new look this month uses a different methodology and arrives at a different result.
What makes it hard to measure the effects of a minimum-wage increase is that employers and workers both make changes in reaction to new pay rates. Employers may automate or find other ways to cut jobs or hours. New workers may become interested in jobs that paid too little to interest them before. Workers may seek to put in more hours, or fewer. Or they may stay longer in jobs they would have been more eager to leave behind at lower pay.
So it’s no simple task to pin down the combined overall effect of all these different adjustments, on different kinds of workers — while filtering out all the other forces affecting a local job market at any given time.
In its new work, the Seattle team used unemployment insurance administrative data to follow thousands of individual workers over time, beginning several years before the minimum-wage increases began. Comparing them to similar workers outside Seattle, they found “significantly more rapid hourly wage growth … following both the first and second minimum wage increases … ” And despite “a modest reduction in hours worked … net pretax earnings increased an average of around $10 a week.”
Meanwhile, there was no measurable job loss as such, but rather a slowing of the “entry rate” of new workers into the low-wage market.
This points to the main complication in these findings. It seems that more experienced workers appear to have received all of the net earnings increase, while “the less experienced … saw larger … decreases in hours … which … fully offset their gain in wages.”
It’s unclear whether that’s a problem or an achievement, or some of both. The report explains that each side in the minimum-wage debate tends to focus on a partial picture of the low-wage workforce. Free-market conservatives picture young go-getters using a low-wage job as a crucial but momentary steppingstone en route to a bigger, better career. Progressive advocates for the working poor picture people who for various reasons struggle to make ends meet via lower-paid work for years on end.
“There is some truth to both narratives,” the researchers write.
Don’t you hate it when that happens?
Conceding that theirs is a “crude first step” in getting to the bottom of the disparities, the Washington researchers divided their worker subjects into a more experienced half and a less experienced half — and, as noted, found that all of the net benefits of the minimum-wage hikes went to the more seasoned workers. Evidently, they write, “employers responded to higher minimum wages by shifting their workforce toward more experienced workers” in hiring decisions, scheduling decisions, etc.
“This may suggest that the low-wage labor market has lost some of its capacity to serve as an ‘avenue of advancement,’ ” they note. But it also means incomes have been improved for longer-term low-wage workers whose situation “most resembles the ‘dead end’ archetype.”
The researchers summarize the “important lesson” of their latest study this way: Seattle’s minimum-wage hikes “have delivered higher pay to experienced workers at the cost of reduced opportunity for the inexperienced.”
And they are forthright in conceding that “these findings contrast with our earlier work, which showed that the total amount paid to workers in low-wage jobs … declined.”
One final point to remember is that the researchers note Seattle’s “extraordinary economic boom” during the period studied and caution against assuming the same results will follow in all other times and places.
Another “important lesson,” you might say: Economic boom times make most everything work better.
D.J. Tice is at Doug.Tice@startribune.com.