The Minimum Wage Apocalypse on Elliott Bay (or Not)

Remember those warnings of an economic apocalypse in Seattle as the minimum wage was raised up to $15-16 per hour? Mark J. Perry was at the forefront of this (faulty) thesis. Having to teach Contemporary Public Affairs this semester, I was moved to return to this debate.

Here’re two figures to refresh memories about what happened.

Figure 1: Minimum wage per hour in Seattle for Schedule 1 (dark blue) and for Schedule 2 (tan), and Federal (green). NBER defined peak-to-trough recession dates shaded gray. Source: BLS, and City of Seattle, NBER, and author’s calculations..

Figure 2: Minimum wage in 2020$ per hour in Seattle for Schedule 1 (dark blue) and for Schedule 2 (tan), and Federal (green). NBER defined peak-to-trough recession dates shaded gray. Source: BLS, BLS, City of Seattle, NBER and author’s calculations.

From Jardim et al., “Minimum-Wage Increases and Low-Wage Employment: Evidence from Seattle,” American Economic Journal: Economic Policy 14(2) (May 2022):

Seattle raised its minimum wage to as much as $11 in 2015 and as much as $13 in 2016. We use Washington State administrative data to conduct two complementary analyses of its impact. Relative to outlying regions of the state identified by the synthetic control method, aggregate employment at wages less than twice the original minimum—measured by total hours worked—declined. A portion of this reduction reflects jobs transitioning to wages above the threshold; the aggregate analysis likely overstates employment effects. Longitudinal analysis of individual Seattle workers matched to counterparts in outlying regions reveals no change in the probability of continued employment but significant reductions in hours, particularly for less experienced workers. Job turnover declined, as did hiring of new workers into low-wage jobs. Analyses suggest aggregate employment elasticities in the range of −0.2 to −2.0, concentrated on the intensive margin in the short run and largest among inexperienced workers.

Previous post on this subject, here.




16 thoughts on “The Minimum Wage Apocalypse on Elliott Bay (or Not)

  1. Moses Herzog

    Did you notice the 4th link (to Mark Perry’s 2016 AEI link) in the older Econbrowser post no longer exists?? I would say the link is “broken” but I strongly suspect AEI took it down. In case you didn’t notice, Mark Perry is still beating the “A living wage for the working class is the spawn of Satan” big bass drum as recently as 2021.

    It’s bewildering to me, that a man who gets paid to carry the AEI’s banner of “private business solves all society’s ills” that when Perry discusses BB&T Richardson’s research, that he speaks in tones of negativity and shame that when a person gets paid $15 an hour they thereby get themselves off of government benefits, and also contribute more revenues to the U.S. government. Oh, the horror and shame of getting off the government dole and helping Uncle Sam balance the budget. Is Mark Perry pro-welfare?? Is Mark Perry taking lessons on logic and polemics from Peter J. Wallison and Ernest “My Son is a druggy/thief Loser” Istook now??

  2. Macroduck

    When I attempted to read the Perry article you linked to back in July, 2016 entitled “New evidence suggests that Seattle’s ‘radical experiment’ might be a model for the rest of the nation not to follow”, aei replied with “page no longer available”.

    Either aei has improved its standards or has a low tolerance for embarrassment.

    1. Moses Herzog

      “or has low tolerance for embarrassment”~~Great minds think alike.

      You know, I am feeling rambunctious tonight, I may try to find the link to that in the “wayback machine” or whatever. All you need is the date or dates and it should work, and I have near to the date. I mean we’re nice guys right??~~we don’t want all Mr. Perry’s hard work to be forever lost in the chasm of the world wide webiology, do we??

    2. Moses Herzog

      Well….. at least once everyday, Uncle Moses has to perform at least one random act of kindness (are any of you buying this load of crap??), and uuuuuhh, It’s Uncle Moses’ great honor to dedicate the following link, to a man who likes stepping on the faces of low income working class folk, with his, uh, jackboots, Mr. Mark J. Perry.

      The comments of a “John A” underneath are also interesting.

      That was for you Dogface Perry. And if you’re ever in my region of USA you can also drop by and eat the crust off my Hanes undies

  3. pgl

    A Higher Minimum Wage Won’t Lead to Armageddon
    The data to support that idea is sketchy or nonexistent.

    The Noah Smith piece is an interesting read. I don’t always agree with Noah but his writings on labor economics are quite good.

  4. JohnH

    The real question is “since raising the minimum wage is such a great idea, why hasn’t the federal minimum wage been raised in 14 years?”

    The answer is not hard to find…Democrats missing in action. Classic case was Florida, 2020: $15 Minimum wage approved by 60% of voters but Democrats refused to openly endorse it and got wiped out. Does it get any more pathetic than that?

    1. pgl

      No lying troll. The opposition is from the Republicans that YOU help get re-elected. Now missing in action is your brain.

    2. pgl

      “Classic case was Florida, 2020: $15 Minimum wage approved by 60% of voters”

      Jonny forgets to note that the legislature consisted of 71 Republicans and only 46 Democrats. Seriously is Jonny boy this effing stupid or what?

      What percent of voters support a woman’s right to choose? And yet the post Dobbs world has seen lots of denial of a woman’s right to have basic medical care. I wonder why little Jonny boy is not chirping about that.

    1. pgl

      “”If more Democrats ran with increasing the minimum wage, we would have won more seats,” she said late Tuesday, then spelled it out on Twitter”

      So says one person on the Twitter. OK – let’s be generous. Democrats might have kept their 46 seats with Republicans being at 71 not 78. And the chances they would get a $15 minimum wage there is zero.

      Jonny boy is even worse at politics than economics and I did not think anyone could ever be THAT incompetent.

    2. pgl

      Wow – only the most dishonest troll would pretend Florida is not seeking a higher minimum wage. If Jonny boy knew about this – then he is only pathetic little liar:

      By WPTV – Staff
      Published: Sep. 30, 2023 at 11:50 AM EDT|Updated: 5 hours ago
      Starting Saturday, Florida workers earning the minimum wage received a raise of $1 per hour to $12.

      On Nov. 3 2020, voters approved a constitutional amendment, which raised the minimum to $10 per hour, effective Sept. 30, 2021, then an additional $1 per hour each year for five years, until September 30, 2026, when it would become $15 per hour. After that, minimum wage increases would be tied to annual inflation adjustment.

      Jonny boy’s case in point over his claim that we are not getting a higher minimum wage is a state that is raising this rate to $15 an hour over time.

      I guess Jonny boy takes GREAT PRIDE at being the most dishonest troll ever.

  5. Grunschev

    I suggest that there’s no linkage between the minimum wage and employment.

    Let’s use a fast-food restaurant as an example. Some people seem to think that when the wage goes up, employers will employ fewer people. This is just nonsense and demonstrates a failure to think. The number of employees is not dependent on wages. The number of employees is based on sales. Managers know how many workers it takes to sell x number of lunches. If the manager could do with fewer workers, they’d already have fewer workers. Why would a sane manager employ more people than is required to do the work?

    This is true regardless of the type of business – fast-food, manufacturing, banking, entertainment, transportation, healthcare, you name it. Good managers don’t hire people they don’t need and they don’t fire people they need just because wages go up. Employment is based on sales. Period. Cost of nurses goes up? Either pay the higher wage, or fire a nurse and see fewer patients. Cost of mechanics goes up? Pay the wage or fire a mechanic and fix fewer cars.

    The same goes for the argument that reducing taxes increases employment. Employment is based on sales, not wages, not taxes.

    This isn’t rocket surgery.

    (I’ve been developing workforce planning models for a quarter of a century across all industries.)

    1. Baffling

      This assumes a sane manager. That may be an exaggerated assumption. I have seen positions unfilled, but required, for a business to operate. Usually you see performance fall. Customer service collapses, because remaining employees are overwhelmed. Lack of quality management, and the resulting decisions, is a major problem in today’s work world. Management skills are lacking.

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