Must-Read: Michael Reich, Sylvia Allegretto, and Anna Godoey: Seattle’s Minimum Wage Experience 2015-16

Must-Read: Low-end labor markets simply do not appear to work like competitive markets. Rather, they work like markets in which employers have substantial market power—and thus minimum wage laws have the same efficiency benefits as does natural-monopoly rate regulation. Why low-end labor markets do not appear to work like competitive markets is a very interesting—and, I believe, unsolved—question. But it is in all likelihood a fact to deal with:

Michael Reich, Sylvia Allegretto, and Anna Godoey: Seattle’s Minimum Wage Experience 2015-16: “Seattle implemented the first phase of its minimum wage law on April 1, 2015… http://irle.berkeley.edu/seattles-minimum-wage-experience-2015-16/

…raising minimum wages from the statewide $9.47 to $10 or $11, depending upon business size, presence of tipped workers and employer provision of health insurance. The second phase began on January 1, 2016, further raising the minimum to four different levels, ranging from $10.50 to $13, again depending upon employer size, presence of tipped workers and provision of health insurance…. We analyze county and city-level data for 2009 to 2016 on all employees counted in the Quarterly Census of Employment and Wages and use the “synthetic control” method…. Our study focuses on the Seattle food services industry… an intense user of minimum wage workers; if wage and employment effects occur, they should be detectable in this industry…. Our… synthetic control group meets accepted statistical standards…. Wages in food services did increase—indicating the policy achieved its goal—and our estimates of the wage increases are in line with the lion’s share of results in previous credible minimum wage studies. Wages increased much less among full-service restaurants, indicating that employers made use of the tip credit component of the law. Employment in food service, however, was not affected, even among the limited-service restaurants, many of them franchisees, for whom the policy was most binding. These findings extend our knowledge of minimum wage effects to policies as high as $13…