Seattle loses on $15 fight

For years, the union-backed slogan “Fight for $15” has been a popular liberal rallying cry. The idea of raising the minimum wage speaks directly to people’s concerns about income inequality and is a simple enough concept to put on a bumper sticker.

In recent years, the popular idea has begun to translate into electoral and legislative victories. In cities from New York to San Francisco, a $15-an-hour minimum is set to go into effect in coming years.

There is just one problem to all of this. Minimum wage increases don’t translate into big income increases for low-skill workers when taken to extremes.

Witness the city of Seattle, where civic leaders adopted a phased-in $15-an-hour wage in 2014. Though it is not fully in place, a study by the University of Washington and the National Bureau of Economic Research found that employers have already cut back on hours to compensate for the higher wages.

The study, backed by the city and with unusually detailed access to employment data, found that the second round of wage boosts to $13 an hour produced a three per cent increase in average wages. But employers cut back on hours by nine per cent, meaning that the city actually suffered a six per cent drop in the total wages paid.

States and communities around the U.S. should take a deep breath, slow down, and carefully examine what happens in Seattle over the next few years before pushing ahead with a $15 minimum wage.

It might fit on a bumper sticker. But that does not make it a good idea.