Seattle Min Wage Hikes Crushing The Poor: 6,700 Jobs Lost, Annual Wages Down $1,500 - UofW Study

Just last week we noted that McDonalds launched plans to replace 2,500 human cashiers with digital kiosks like the ones below (see: McDonalds Is Replacing 2,500 Human Cashiers With Digital Kiosks: Here Is Its Math):


Of course, no matter how much anecdotal and/or hard evidence is presented to liberals on the negative consequences on higher minimum wages they simply can't be convinced it's a bad idea.  Somehow, the basic economic concept that raising the price of good (i.e. wages) would somehow destroy demand (i.e. employment levels) for that good just does not compute in the minds of progressives.

Never the less, below is yet another study from economists at the University of Washington that reveals some fairly startling takeaways about Seattle's minimum wage.  Per the chart below, minimum wages in Seattle increased from $11 in 2015 to $13 in 2016 and $15 in 2017 for large employers.


To our total shock, the study found that higher minimum wages caused a 9.4% reduction to total hours worked by low-skilled workers, or roughly 14 million hours per year.  Given that a full-time employee works 2,080 hours per year, that's equivalent to just over 6,700 full-time equivalents who have lost their jobs, just in the city of Seattle, courtesy of moronic politicians who don't seem to grasp basic mathematical concepts.

Our preferred estimates suggest that the Seattle Minimum Wage Ordinance caused hours worked by low-skilled workers (i.e., those earning under $19 per hour) to fall by 9.4% during the three quarters when the minimum wage was $13 per hour, resulting in a loss of 3.5 million hours worked per calendar quarter. Alternative estimates show the number of low-wage jobs declined by 6.8%, which represents a loss of more than 5,000 jobs. These estimates are robust to cutoffs other than $19.45  A 3.1% increase in wages in jobs that paid less than $19 coupled with a 9.4% loss in hours yields a labor demand elasticity of roughly -3.0, and this large elasticity estimate is robust to other cutoffs.

Adding insult to injury, pay hikes weren't nearly enough to offset lost hours...

Importantly, the lost income associated with the hours reductions exceeds the gain associated with the net wage increase of 3.1%. Using data in Table 3, we compute that the average low-wage employee was paid $1,897 per month. The reduction in hours would cost the average employee $179 per month, while the wage increase would recoup only $54 of this loss, leaving a net loss of $125 per month (6.6%), which is sizable for a low-wage worker.

To our complete 'surprise', the study found that demand for low-wage jobs is more elastic than prior studies from more liberal institutions may have suggested.  Shockingly, low-wage jobs are apparently particularly susceptible to automation...who knew?

These results suggest a fundamental rethinking of the nature of low-wage work. Prior elasticity estimates in the range from zero to -0.2 suggest there are few suitable substitutes for low-wage employees, that firms faced with labor cost increases have little option but to raise their wage bill. Seattle data show – even in simple first differences – that payroll expenses on workers earning under $19 per hour either rose minimally or fell as the minimum wage increased from $9.47 to $13 in just over nine months. An elasticity of -3 suggests that low-wage labor is a more substitutable, expendable factor of production. The work of least-paid workers might be performed more efficiently by more skilled and experienced workers commanding a substantially higher wage. This work could, in some circumstances, be automated. In other circumstances, employers may conclude that the work of least-paid workers need not be done at all.

Here is a look at the estimated percentage change in hours worked...


...and total hours.


Conclusion: Keep up the good fight, Bernie.  With policies like these, Nancy Pelosi may be the least of Democrats' worries.


Endgame Napoleon Blue Balls (not verified) Mon, 06/26/2017 - 16:06 Permalink

Few people make minimum wage, but even when making $3/hr above the minimum wage, you cannot finance housing and other basic bills unless you are paid to reproduce by government, are living with your parents or have spousal income.

Employers just cut hours when wage demands are imposed on them. A reduction in hours is beneficial to those who are paid by taxpayers to reproduce.

The work requirement for welfare is 20 hours per week. All a mom must do to get free housing, free food, monthly cash assistance, energy assistance, daycare assistance and Child Tax Credits up to $6,269 is work 20 hours per week, submitting proof to the department of Human Services when she applies for benefits.

She has to present 8 paycheck stubs. How do i know, not because I have ever even received one dime of UC between low-wage, churn jobs as a childless worker. I worked at DHS, seeing the process unfold month after month. With college degrees, we were paid little more than the clients.

The less she makes, the easier it is for a mom in a single-earner household to qualify for welfare. It drives wages and hours down for all of us who do not get our bills paid for sex and reproduction. A good example is an insurance job I worked after adding 4 state-required licenses to my bachelor's degree and 20 years of sales experience. This was typical of many other work settings.

I was paid $10/hr, while the unlicensed mom who held the position prior to me was paid $9/hr. Who had an independent household: her or me? Well her, of course. Sex and reproduction out-of-wedlock with multiple fathers paid off in everything from a free apartment, to free food, to a $6,269 Child Tax Credit. I just had the $10/hr to cover all bills. Why would she go through the cumbersome, legal process of licensing? Why be a fool?

The income limites for single moms were around $869 when I worked at DHS, and it was approx. $50/month less to qualify for the per-child cash assistance.

Whatever low-wage workers do, including adding many useless, but time-consuming and costly licenses, certifications and most degrees, many of those who lack the ability to add unearned income from spouses or government via sex and reproduction are simply screwed.

Hard work and sales production certainly guarantees nothing unless you are the manager. Sales production usually results from all-day, everyday attendance and hard work, but that is put below the ability to accept low wages and part-time work due to your unearned, womb-based income streams.

Since most managers are parents who are off all the time in excused-absenteeism cliques, it is not an advantage to work hard and produce high numbers. Managers do like that it adds to their bonus and may pump you up for awhile to keep you doing it, but will still churn you in cases where they prefer crony, backscratching, absentee parents. Because, parents watch each other's backs in absenteeism rings.

The cost reduction from hiring mostly those who can accept rock-bottom wages is much more important than individual sales.

The back-office jobs and even more and more of the sales-related jobs are quite automated already and pay little more than food services, less in some cases, like many insurance back-office jobs, for instance.

In reply to by Blue Balls (not verified)

Tall Tom (not verified) BeerMe Mon, 06/26/2017 - 16:45 Permalink

  You advocate the MURDER of the UNBORN? Christ Jesus has provided a place for you in the depths of Hell. Enjoy your Master Satan, you demonic spawn. Yes. There is a God. And you are going to be shocked when you find that out.

In reply to by BeerMe

cornflakesdisease Tall Tom (not verified) Mon, 06/26/2017 - 20:17 Permalink

What is the condition of the dead?Eccl. 9:5: “The living are conscious that they will die; but as for the dead, they are conscious of nothing at all.”John 11:11-14: “‘Lazarus our friend has gone to rest, but I am journeying there to awaken him from sleep.’ . . . Jesus said to them outspokenly: ‘Lazarus has died.’”Just saying 

In reply to by Tall Tom (not verified)

Tall Tom (not verified) Mtnrunnr Mon, 06/26/2017 - 16:51 Permalink

  You may live in the World but you haven't a clue about how it works. You are as cluless, as the Government is, just as unwise as the Government, as you are promoting policies that wiil ensure your own personal destruction as well as that of the destruction of the Government. Are you really that fuckin' naive to believe that the Government passes legislation to mandate increases in Minimum Wage for the employees' benefit? The Government passes that type of legislation to INCREASE THEIR OWN REVENUE. As Payroll Taxes withheld are based upon a PERCENTAGE of WAGES EARNED, then any increase in the Gross Wages Earned by an employee will increase the amount of Taxes withheld. While it is true that in most cases the Federal Withholdings and some of the State Withholding may be refunded IT IS NOT TRUE WITH THE REST OF THE PAYROLL TAXES WITHHELD. This the passage of any Minimum Wage Legislation is nothing more than passing a STEALTH TAX INCREASE. As it also mandates an INCREASE in TAXES that an Employer must also pay then the EMPLOYER HAS AN INCENTIVE TO AUTOMATE  and MAKE THE CAPITAL INVESTMENT TO PURCHASE AND MAINTAIN MACHINES, AUTOMATONS, ROBOTS. Of course the Employer will end up firing his entire Minimum Wage staff with the consequence that Government Revenues will decline precipitously in the long term... And thus it is a self defeating and a self destructive Government Policy. Maybe you have a point... Yeah. Thinking about it...Go Government go. Self Destruct. Who am i to stand in the way of that? Starve out them unskilled snowflakes. Make certain that they are unemployed, unemployable, and absolutely destitute, before you implode and remove the remaining Social Safety nets. And before blaming me for being uncaring...That is the result of the destructive policies WHICH YOU ARE ADVOCATING. NOT ME. YOU...Y...O...U..YOU. Take a fuckin' GOOD LOOK IN THE MIRROR. Afterwards, with Government out of the way, then maybe we can get some business done. What is this crap? Are you an IRRATIONAL CUNT?

In reply to by Mtnrunnr

Xamune Mtnrunnr Mon, 06/26/2017 - 18:09 Permalink

Up until 1913, Americans kept 100% of thier earnings. Despite this, we had water, schools, colleges, roads, railroads, streets, subways, law enforcement, and a military WHO JUST HAPPENED TO WIN MANY WARS. If taxation is the "foundation to civilization", please tell us o brainwashed one, how the hell did we survive over a century without one???

In reply to by Mtnrunnr

VZ58 Mtnrunnr Mon, 06/26/2017 - 22:01 Permalink

Yes, it is an exchange for some common good that we all can partake of. But no one is entitled to take my money so that some welfare cows can reproduce ad nauseaum without any hint of personal responsibility for ones life. Go join a church if you want to be a social worker. 

In reply to by Mtnrunnr

The Wedge Mtnrunnr Mon, 06/26/2017 - 15:35 Permalink

NoThe imbalance is built in to the monetary system. Endless growth and endless inflation. Much as you and central bankers would like it, you cannot change the real value of basics like labor. Although, they, unlike you, have the ability to change the value of currency. As they inflate the currency they must raise the minimum wage behind real inflation but it is not a net gain. PERIOD! In fact many would argue it is, over time, a net loss.Minimum wage is just a monetary tool. Not understanding this and picketing Mc whoever is counter productive. Business pass their cost of delivering said product or service to YOU the consumer. This includes taxation and LABOR.You cannot arbitrarily change the value of real products and services. The problem is almost always our central bank/debt monetary system.

In reply to by Mtnrunnr

True Blue Mtnrunnr Mon, 06/26/2017 - 16:26 Permalink

It is going to be a lot less luxurious when the prices rise to cover the increased costs, and more money is seeking the same apartments etc. causing (again) those prices to go up. Minimum wage earners will be at best in the same place they are and more likely worse off as a result of this; and everyone else will have to pay higher costs of living -effectively cutting their wages.

In reply to by Mtnrunnr

Charvo Mtnrunnr Mon, 06/26/2017 - 22:36 Permalink

This is called overpopulation.  If I were ever caught in a situation where I couldn't get a decent job in a certain area because of too many people fighting for the same job, then it's time to move.  It's not against the law to move elsewhere.  I bet there are better places to get a job with lower cost of living factors.

In reply to by Mtnrunnr