Last year when Seattle announced it was raising the minimum wage to $15 per hour, I made four predictions about how the policy would affect the city over the next three years. One of the predictions was that,
Unemployment will increase for low-wage workers — It’s true that economists disagree about the effects of the minimum wage on employment and the living standards of minimum wage earners. But almost all of the disagreement is about relatively small increases—less than 20 percent. Seattle is about to increase the minimum wage by 61 percent — over three times the detrimental rate. Almost all economists agree that significant increases to the minimum wage or attempts to bring it in line with a “living wage” (e.g., $12-15 an hour) would lead to significant increases in unemployment.
The full effect of the wage increase won’t take effect for two more years. But there is already evidence that this prediction is coming true.
In January the state of Washington increased its minimum wage to $9.47 an hour, the highest in the country. Then on April 1, Seattle’s first increase kicked in, raising the city’s minimum wage to $11 an hour. The result: Seattle lost 1,300 restaurant jobs from January to June. As Mark Perry explains,