Proof that Raising the Minimum Wage is a Bad Idea

Arbitrary government-mandated wage increases does not a rich person make. In fact, it means fewer jobs for those who need one and fewer hours for those who have one.

That’s the news out of the Emerald City this week, after a University of Washington study found that Seattle’s recent minimum wage hike up to $13 depressed the job market for low-skilled employment and caused worker’s hours to drop.

By collecting wage data from Washington’s Employment Security Department, the researchers were able to compare the average wages of workers (those in low-skill jobs affected by the wage increase) before the minimum wage increase and after.

The result of the minimum wage increase? Employers paid employees more money per hour but shortened their hours. The two factors did not offset each other as progressive well-wishers might have hoped. The research paper concludes:

“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.

Importantly, the lost income associated with the hours reductions exceeds the gain associated with the net wage increase of 3.1%. 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”[i]

The numbers are staggering: the average low-wage worker in Seattle – the very people, Seattle’s city government is claiming to help – saw a 6.6% monthly wage decrease!

The study is more evidence that the well-intentioned but short-sighted and prosperity-averse agenda of the economic left leaves workers with little chance for upward mobility and crushes them as soon as they land a low-wage job, the first rung of the economic ladder.

And don’t think that a study of Seattle isn’t relevant to South Carolina.

Just last year, South Carolina’s legislature thankfully killed a proposed minimum wage increase, but it’s only a matter of time before it resurfaces. In a manufacturing state like South Carolina, an hourly wage increase leading to a 6.6% monthly wage decrease would be detrimental to South Carolina’s workers.

[i] University of Washington. (2017). Minimum Wage Increases, Wages, and Low-Wage Employment: Evidence from Seattle, WA.