Last year, researchers at the University of Washington released an alarming study purporting to show that a minimum wage increase in Seattle was harming the workers it intended to help. The paper reported that average pay for Seattle workers fell by $125 a month after two increases to the minimum wage. This was a controversial finding, bolstering conservatives like Ted Cruz who are against increasing the minimum wage.
But now, the same researchers have published a new study showing exactly the opposite result, according to the New York Times. “We’re prepared to have a lot of people come out and say we’re contradicting ourselves,” Jacob Vigdor, a University of Washington economist and an author of the study told the Times. “That we’re flip-flopping.”
What the new study found is essentially that the effects of raising the minimum wage are complex and need to be studied with nuance. It turns out that Seattle’s minimum wage increase—to $11 an hour from $9.47 an hour in 2015, and up again to $13 an hour in 2016—had different effects on different types of workers. Who would have thought.
The researchers learned that low-wage employees who worked the most in the nine months leading up to the wage increase saw the biggest benefits. The Times writes that those workers “saw a significant increase in their wages and only a small percentage decrease in their hours, leading to a healthy bump in overall pay—an average of $84 a month for the nine months that followed the 2016 minimum-wage increase.” Workers who worked less in those preceding months were relatively unaffected by the minimum wage increase, making about $4 more a month on average. Finally, workers who were considered possible “new entrants” into the workforce fared worse.
“For folks trying to get a job with no prior experience, it might have been worth hiring and training them when the going rate for them was $10 an hour,” Vigdor told the Times.
This is all to say that though raising wages has complicated effects, they’re still not as dire, at least in Seattle, as Vigdor and his colleagues reported last year. So what happened?
Economist and expert on minimum wages Ben Zipperer believes the original study was flawed.
From the Times:
In a booming economy, Mr. Zipperer argued, we would expect to see fewer workers employed at low wages—not because employers decide it’s not worth hiring people, but because the competition for workers bids up wages, and many low-paying jobs disappear and are replaced by somewhat higher-paying jobs.
Alternatively, many potential low-wage workers may decide it’s too expensive to live and work in Seattle even with the benefit of a higher minimum wage, leading them to leave the city or not migrate there in the first place.
In either case, it would be the boom, and not a minimum-wage increase, that was reducing the number of hours worked at low wages.
“At the end of the day, it really to me points to the hazards of a single case study,” Zipperer told the Times. “If something contaminates the case study, like a shock to Seattle, you’re out of luck. There’s no counterbalance you can use.”
In a blog for the Economic Policy Institute on Monday, Zipperer said that he thinks even the new study has flaws:
By comparing workers in Seattle with workers elsewhere in Washington state, the study incorrectly assumes that the low-wage labor market in Seattle would have grown like other areas in Washington, were it not for the city’s 2015-2016 minimum wage increases. This comparison is unreasonable because, as other researchers have demonstrated (Dube 2017, Rothstein and Schanzenbach 2017, Zipperer and Schmitt 2017), Seattle experienced much faster wage gains for reasons that had nothing to do with the minimum wage. Indeed, the authors of the new study find that Seattle had faster wage growth and diverged from other regions prior to the city’s minimum wage increases.
Vigdor said that one possible takeaway from the new study is that minimum wage increases may only help certain groups of people. In this case, that would be families working for years in low-paying jobs. At the same time, it could hurt workers like college students trying to find short-term, part-time jobs while they’re in school.
“Whatever you think about that trade-off depends on your values,” Vigdor told the Times. “We want to illuminate those trade-offs, make them as clear as possible. But we aren’t being paid the big bucks to make the final decision.”