Working Paper: NBER ID: w23532
Authors: Ekaterina Jardim; Mark C. Long; Robert Plotnick; Emma Van Inwegen; Jacob Vigdor; Hilary Wething
Abstract: This paper evaluates the wage, employment, and hours effects of the first and second phase-in of the Seattle Minimum Wage Ordinance, which raised the minimum wage from $9.47 to as much as $11 in 2015 and to as much as $13 in 2016. Using a variety of methods to analyze employment in all sectors paying below a specified real hourly wage rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by 6-7 percent, while hourly wages in such jobs increased by 3 percent. Consequently, total payroll for such jobs decreased, implying that the Ordinance lowered the amount paid to workers in low-wage jobs by an average of $74 per month per job in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.
Keywords: Minimum Wage; Employment; Wages; Seattle
JEL Codes: H23; J23; J38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| first minimum wage increase (J38) | elasticity of employment with respect to wage increases of approximately 0.9 (J39) |
| second minimum wage increase (J38) | elasticity of employment with respect to wage increases closer to 2.6 (J39) |
| Seattle's minimum wage increase from $9.47 to $11 (J38) | insignificant effect on employment in the restaurant industry (J63) |
| Seattle's minimum wage increase to $13 (J38) | significant reduction of hours worked in low-wage jobs by 6.7% (J38) |
| Seattle's minimum wage ordinance (J38) | decrease in total payroll for low-wage jobs (J39) |
| Seattle's minimum wage ordinance (J38) | reduction in overall earnings for low-wage workers by an average of $74 per month per job in 2016 (J31) |