Seattle’s Minimum Wage Hike Did Not Reduce Restaurant Jobs, Finds Study
Business owners often argue that higher minimum wages may require them to cut back on their workforce to balance out cost increases. Yes, increased labor costs can hurt a business’s bottom line – especially with the tight margins in the restaurant industry – however, plenty of other factors besides job cuts can balance this out. A new study suggests that’s exactly what’s happening in Seattle: As the city’s minimum wage has slowly ramped up, the number of restaurant jobs has remained steady.
Though minimum wage increases have become more commonplace in large cities across the country, Seattle was an early adopter with the first implementation of a tiered minimum wage increase starting on April 1, 2015. For that reason, the Center of Wage and Employment Dynamics (CWED) – part of the University of California-Berkeley’s Institute for Research on Labor and Employment – chose to use the Washington city for the first of what will be a series of reports on the impact of significant minimum wage increases (those that range from $12 to $15).
The report – which looked at Seattle’s restaurant industry from 2009, when it followed the state minimum wage of $8.55, to 2016, when the city’s minimum wage reached a high of $13 (on its way to $15 by 2021) – found that the law was far from the job killer many groups warned that it would be. “Seattle’s minimum wage law is working as intended, raising pay for low-wage workers, without negatively affecting jobs,” Professor Michael Reich, lead author of the report, said in a statement. “These findings are consistent with the lion’s share of rigorous academic minimum wage research studies.”
The CWED came to this conclusion by using what it calls “synthetic controls” methods, comparing real restaurant pay and job growth information from the Quarterly Census of Employment and Wages with a “synthetic Seattle,” built from data of comparable US metropolitan economies that didn’t institute such wage increases.
As an interesting side note, the study states, “Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding.” As you may recall, the limited-service restaurant industry – aka fast food – has been one of the most adamant against these kinds of minimum wage increases across the country. But for advocates of higher minimum pay, studies like these will add more fuel to fire for affording people in all lines of work a living wage across the country.