Higher minimum wage is better? Studies reach opposite conclusions

By  | 

(AL.COM) Will a higher minimum wage lead to fewer employees or better opportunity? It depends on who you ask, based on two recent studies.

A paper published Monday by the National Bureau of Economic Research says the costs to low-wage workers in Seattle was three times the benefit. That's based on research by University of Washington economists. Seattle began phasing in a mandatory $15-an-hour minimum wage three years ago.

Those conclusions contradict years of studies, according to The Washington Post.

The paper evaluates the effects as Seattle's minimum wage ordinance was phased in, which raised the minimum wage from $9.47 to $11 per hour in 2015 and to $13 per hour in 2016.

According to researchers, the second wage increase to $13 reduced hours worked in low-wage jobs by around nine percent, while hourly wages in such jobs increased by around three percent.

Total payroll fell for those jobs, with researchers saying the minimum wage ordinance lowered low-wage employees' earnings by an average of $125 per month in 2016.

The study is not without its critics, which argued over its methodology. It was also contradicted by another study last week by the University of California, Berkeley, which focused on food service jobs. It said Seattle's minimum-wage law led to higher pay for restaurant workers without affecting the number of jobs. Wages increased much less among full-service restaurants, largely due to a "tip credit" provision in the law.

The department plans other studies on the effects of similar laws in Chicago, Oakland, San Francisco, San Jose and New York City.

In Alabama, the state's National Association for the Advancement of Colored People and Greater Birmingham Ministries have appealed the dismissal of a lawsuit over a state law that prohibits cities from passing similar minimum wage laws.

The lawsuit, dismissed earlier this year, claimed a state law that forbids municipalities in Alabama from setting their own minimum wage is tainted "with racial animus."

The Birmingham City Council voted in 2015 to raise the city's minimum wage to $10.10 per hour through incremental raises. The Republican super majorities in the legislature's House and Senate put a bill to void the increase on the fast track, prompting the council to expedite Birmingham's raise, but the law ultimately voided the ordinance.