The $15 Minimum Wage Crowd Tries a Bait and Switch

A study of Seattle used boosters’ favorite approach—yet still showed negative effects for workers

By David Neumark.

"Researchers who support raising the minimum wage often advocate a “close comparison”—using an area geographically nearby."

"Critics say these studies do not convincingly control for shocks to the low-skill labor market. Moreover, comparing across state borders is inherently difficult. Perhaps politicians in one state felt comfortable raising the minimum wage because the labor market there was already strong, while the other state was struggling."

"Consider a 2014 study by Jeffrey Clemens and Michael Wither on what happened when the federal minimum wage was raised from $5.15 to $7.25 in the late 2000s. Rather than crossing a border, they compared groups of workers within each of the affected states. The first group included those who were paid the very lowest wage, on whom the new minimum was “binding.” The control group included workers earning slightly above the minimum. The study estimated that the new federal minimum had eliminated about 800,000 jobs."

"this summer’s research on Seattle’s minimum-wage experiment. The city’s wage floor, previously about $9.50 an hour, has been raised to $13 and is on its way to $15."

"the higher minimum “reduced hours worked in low-wage jobs by around 9 percent.” Consequently, earnings for these employees actually dropped “by an average of $125 per month.”"

"the Seattle study used a “close comparison” method similar to the one they have favored for years. The authors of the study compared workers in Seattle with those in other metropolitan areas in Washington, like Olympia, Tacoma and Spokane."

"In a June letter to city officials, Mr. Reich, the Berkeley professor, wrote that the study “draws only from areas in Washington State that do not at all resemble Seattle.  But this gives away the game: Any researchers doing this kind of study should explicitly choose control areas that show similar trends, as did the University of Washington team. More to the point, if the controls for Seattle can’t be trusted, it undermines the whole idea of “close comparison.”"