By the way, this analysis was performed as dictated by the law when enacted. The lead author, Jacob Vigdor, is a well respected labor economist without strong ideological leanings. He has worked with both the Urban Institute (Left) and Manhattan Institute (Right).
The major conclusion one should draw from this analysis is that the Seattle Minimum Wage
Ordinance worked as intended by raising the hourly wage rate of low- - wage workers, yet the
unintended, negative side effects on hours and employment muted the impact on labor earnings.
The Seattle economy (as well as comparison regions in the state of Washington) is booming, and
this strong macroeconomy has led to improved outcomes for low-wage workers. Yet, our best
estimates find that the Seattle Minimum Wage Ordinance appears to have lowered
employment rates of low-wage workers. This negative unintended consequence (which are
predicted by some of the existing economic literature) is concerning and needs to be followed
closely in future years, because the long-run effects are likely to be greater as businesses and
workers have more time to adapt to the ordinance. Finally, we find only modest impacts on
earnings. The effects of disemployment appear to be roughly offsetting the gain in hourly wage
rates, leaving the earnings for the average low-wage worker unchanged. Of course, we are
talking about the average result.
More specifically, we find that median wages for low-wage workers (those earning less than $11
per hour during the 2 nd quarter of 2014) rose by $1.18 per hour, and we estimate that the impact
of the Ordinance was to increase these workers’ median wage by $0.73 per hour. Further, while
these low-wage workers increased their likelihood of being employed relative to prior years, this
increase was less than in comparison regions. We estimate that the impact of the Ordinance was
a 1.1 percentage point decrease in likelihood of low-wage Seattle workers remaining employed.
While these low-wage workers increased their quarterly earnings relative to prior years, the
estimated impact of the Ordinance on earnings is small and sensitive to the choice of comparison
region. Finally, for those who kept their job, the Ordinance appears to have improved wages
and earnings, but decreased their likelihood of being employed in Seattle relative other parts of
the state of Washington.
We find that Seattle employers closed less frequently than in prior years. Yet, this improvement
was not as strong as in comparison regions. We estimate that the impact of the Ordinance was a
0.7 percentage point increase in the rate of business closures. However, Seattle establishments
opened more frequently than in prior years, and we estimate that the impact of the Ordinance
was a 0.9 percentage point increase in the rate of business openings. Thus, any effect of the
Ordinance on business closures was more than offset by a corresponding increase in business
openings.