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June 20, 2017
Berkeley, CA – Seattle’s groundbreaking minimum wage law is raising pay for low-paid workers without hurting jobs, according to a new report released today by University of California, Berkeley economists. The report, which analyzes employment data before and after the law went into effect, finds no evidence of job loss in the city’s restaurant industry, even as pay reached $13 for workers in large companies.
“Seattle’s minimum wage law is working as intended, raising pay for low-wage workers, without negatively affecting jobs,” said Professor Michael Reich, lead author of the report. “These findings are consistent with the lion’s share of rigorous academic minimum wage research studies.”
Seattle was one of the first municipalities in the U.S. to enact a gradual minimum wage increase to $15 an hour. The minimum wage increased to $10 or $11, depending on business size on April 1, 2015. A second round of increases, including a $13 minimum for some large businesses, took effect on January 1, 2016. In 2017, minimum wage rates for workers in Seattle range between $11 an hour and $15 an hour. The full $15 minimum wage will be phased in for all workers in the city by 2021.
Using state-of- the-art “synthetic controls” methods, the researchers analyzed county and city-level data for 2009 to 2016 for all employees in the Quarterly Census of Employment and Wages. They compared Seattle’s restaurant pay and job growth patterns with a “synthetic Seattle,” constructed from a weighted average of comparable metropolitan economies across the U. S.
The results of the UC Berkeley analysis show that wages in Seattle’s food service industry increased because of the minimum wage law. The wage increase was less pronounced in full-service restaurants, suggesting that restaurants took advantage of the new tip credit included in the city’s minimum ordinance.
The Seattle report is the first in an ongoing series of studies by the University of California research team. They are also examining other U.S. cities that have significantly raised their minimum wage. Similar studies of Chicago, Oakland, San Francisco, San Jose and New York City will follow.
CONTACT: Michael Reich, report co-author, Co-Chair, Center on Wage and Employment Dynamics at the Institute for Research on Labor and Employment, UC Berkeley, firstname.lastname@example.org, (510) 384-4551 (cell)