Minimum wage lessons for Seattle’s $15 won’t be learned by looking at other cities

Earlier we looked at the wrangling over the effects of raising the minimum wage. When theory fails to provide clarity, a look at reality is appealing. So it’s not surprising that the Seattle Times seeks to learn lessons from San Francisco’s highest-in-the-nation $10.74 municipal minimum wage. The Times interviewed economists who have studied the effects, including a founding member of the Union for Radical Political Economics.

“Our data show that an increase up to $13 an hour has no measurable effect on employment,” said Michael Reich, a Berkeley economics professor with the Institute for Research on Labor and Employment.

Still, Reich, whose work has been cited by President Obama in pressing for a higher federal minimum, stopped short of saying there would be no significant impact if Seattle leaders were to raise the minimum wage here to a proposed $15 an hour, a 61 percent jump.

“We have not studied what would happen at $15,” Reich said.

As we pointed out earlier, Seattle’s advocates for a $15 wage are entering unknown territory. The magnitude of the Seattle proposal is significant. Size matters.

And with Seattle contemplating a 61 percent jump, low-skilled employment could drop as much as 18 percent, [Joseph] Sabia [an economics professor at San Diego State University] said.

…“When talking about a $15 minimum wage, you’re going to a level that’s somewhat unprecedented,” said Michael Saltsman, research director for the Economic Policy Institute, which is partially funded by the restaurant industry.

“A 60 percent increase in labor costs doesn’t just wipe out profits at a typical restaurant, it wipes them out four times over,” he said.

Meanwhile, in Seattle, efforts to agree on a wage hike business and labor can support have yet to pay off. If a resolution cannot be reached – or if the compromises are unacceptable to advocates – an initiative is likely, according to the Seattle Times.

The Socialist Alternative party, which helped Sawant pull off her upset win to the council on a $15 minimum-wage platform, has an office in the same Chinatown ID building as 15 Now.

Philip Locker, a national organizer for the party and former Sawant campaign political director, said the goal of the party and 15 Now is to get enough signatures to qualify an initiative.

“There’s no guarantee what the mayor’s committee will recommend or what the City Council will approve. We have to be prepared to go to the ballot if they fail to come up with a strong measure in time.”

King County labor leaders seem to agree, reports Publicola.

…another labor leader and [mayor’s income inequality] committee member, King County Labor Council head David Freiboth, was a little less restrained, suggesting that the labor group will be open to an initiative if business interests on the committee water down the proposal with too many business-friendly exemptions.

Consensus was always unlikely. But now it appears that anything other than “$15 Now” will be unacceptable to the activist base. Regardless of the consequences for low-wage, inexperienced, and young workers.