A new study of Seattle’s minimum wage increase by researchers at the University of Washington (UW) suffers from a number of data and methodological problems that undermine and cast doubt on its conclusions. In a new EPI paper, The “high road” Seattle labor market and the effects of the minimum wage increase, economists Ben Zipperer and John Schmitt describe the shortcomings in the UW analysis and make suggestions for how the researchers can correct for these problems in future iterations of their long-term study of the Seattle minimum wage.
“There are a number of methodological issues that call the results of the University of Washington study into question,” said Zipperer. “There is a large body of research that shows that modest increases in the minimum wage boost wages for low income workers without causing job loss, and nothing in the UW study suggests we should revise those conclusions.”
The UW study, which calculates employment losses that are well outside the bounds of most published research on the minimum wage, contains several notable flaws that cast significant doubt on its findings and likely bias it towards showing job loss when none occurred.
The UW study does not construct a valid control group for Seattle and thereby conflates the growing Seattle labor market with the effects of the minimum wage—attributing its shift away from lower-wage jobs to employment losses due to the policy. The study appears to show substantial growth in jobs paying above $19 an hour as a result of the minimum wage increase—a finding that is out of line with existing research on the minimum wage as well as common sense. At the same time, the study does not find a spike in employment at the level of the new minimum wage. Both of these findings are consistent with Seattle shifting from lower-wage to higher-wage jobs, regardless of the minimum wage increase.
The UW study also omits all businesses with multiple locations in Washington State, thereby excluding roughly 40 percent of the workforce from their data and making it difficult to draw any accurate conclusions about employment changes following the minimum wage increase. Even if employment in fact grew in multi-site firms, as is likely, any shift in employment from single- to multi-site firms would be inaccurately counted as job loss as a result of this omission.
“Bold action is needed to reverse decades of wage stagnation that have kept living standards down for low-wage workers,” said Zipperer. “Concerns about job loss can be misleading. What’s important is, will low-wage workers be better off with a higher minimum wage? Every piece of credible research points to the answer to that question being yes.”
The UW study is likely one of many they will produce on the Seattle minimum wage in coming years. Given the public trust granted in the form of financial support and access to confidential data, the researchers have a special obligation to address the concerns that have been raised about their data and methodology. Seattle—and the country as whole—deserves the most accurate assessment possible of the economic impact of raising the city’s minimum wage.