William F. Buckley Jr. used to speak of the “invincible ignorance” of liberalism, and there’s hardly a better example than the minimum wage. Generally the first thing you learn on the first day of Econ 101 is that if you raise the price of something, you’ll reduce the demand for that something. Including labor.
So it’s fun to notice this morning that the city of Seattle, which threw out both shoulders patting itself on the back for raising its minimum age to $11 an hour last year, is finding the results are . . . not so good. Seattle commissioned a study by a group of economists, who reported in a few days ago:
Yet the actual benefits to workers might have been minimal, according to a group of economists whom the city commissioned to study the minimum wage and who presented their initial findings last week.
The average hourly wage for workers affected by the increase jumped from $9.96 to $11.14, but wages likely would have increased some anyway due to Seattle’s overall economy. Meanwhile, although workers were earning more, fewer of them had a job than would have without an increase. Those who did work had fewer hours than they would have without the wage hike.
Accounting for these factors, the average increase in total earnings due to the minimum wage was small, the researchers concluded. Using their preferred method, they calculated that workers’ earnings increased by $5.54 a week on average because of the minimum wage. Using other methods, the researchers found that the minimum wage hike actually caused total weekly earnings to drop — by as much as $5.22 a week. . .
If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase, workers’ total earnings could decline. . .
They attributed a wage increase of about $0.73 an hour for low-income workers to the minimum wage, and another $0.45 an hour to the improving economy. After the increase, Seattle’s workers got about seven more hours in a quarter. Workers’ hours increased even more in other parts of the state, however, leading the researchers to conclude that the minimum wage reduced the number of hours worked quarterly by 3.2, roughly 15 minutes each week.
Those figures do not include workers without jobs. The economists estimated that the minimum wage decreased the share of workers with jobs by about 1.2 percentage points.
As Glenn Reynolds likes to say: Unexpectedly!TM
Incidentally, Seattle’s minimum wage will rise to $13 an hour at “large firms” later this year, and $15 an hour next year. Expect more “unexpected” results.