Speed Reads

minimum wage

Seattle's $15 minimum wage experiment might already be crashing and burning

A 2014 law designed to incrementally raise the minimum wage of Seattle's low-income workers up to $15 an hour has apparently backfired, a study conducted by University of Washington economists concluded. The findings show that low-wage employees actually lost an average of $125 a month under the new model, or about $1,500 a year, due to employers' reduced payrolls and hours.

Most alarmingly, "the paper's conclusions contradict years of research on the minimum wage," The Washington Post reports. "Many past studies, by contrast, have found that the benefits of increases for low-wage workers exceed the costs in terms of reduced employment — often by a factor of four or five to one."

Massachusetts Institute of Technology economist David Autor, who reviewed the paper, said the study strikes him as "likely to influence people" and called the work "very credible." "If I were a Seattle lawmaker, I would be thinking hard about the $15 an hour phase-in," said Autor.

Still, the research is in its early stages and has not yet been tested by peer review. But based on the preliminary findings, FiveThirtyEight suggests the Seattle experiment — with the highest minimum wage in the nation, at $13 an hour in 2016 — was possibly a case of being too extreme too quickly.

"The literature shows that moderate minimum wage increases seem to consistently have their intended effects, [but] you have to admit that the increases that we're now contemplating go beyond moderate," said economist Jared Bernstein, of the left-leaning Center on Budget and Policy Priorities. "That doesn't mean, however, that you know what the outcome is going to be. You have to test it, you have to scrutinize it, which is why Seattle is a great test case."