Wall Street Journal Claims Raising The Minimum Wage Leads To “Fewer Opportunities” For Working Families
Editorial Board Distorts Research Conclusions To Fit Anti-Minimum Wage Narrative
Blog ››› ››› ALEX MORASH
The Wall Street Journal bizarrely claimed the idea of raising minimum wages had been “thoroughly dismantled” after a study found Seattle low-wage jobs grew by only 99 percent as much as the study’s model predicted would have been the case if the city had not raised the municipal minimum wage.
In an August 14 editorial, the Journal claimed that raising the minimum wage would lead to “fewer opportunities” for working families, citing a report from researchers at the University of Washington that found low-wage employment grew by one percentage point less than the researchers predicted had the city not raised wages. The report looked at economic growth in Seattle since it raised the local minimum wage to $11 per hour in April 2015, as part of the city’s gradual phase-in of a $15 per hour minimum wage. The Journal cited the report as evidence that “Seattle’s increase last year seems to be reducing employment,” dismissing that the same researchers found that the Seattle economy saw a “boom in job growth” over the last 18 months. The Journal also misleadingly claimed that “only 73 cents” of the recorded wage growth experienced by low-income workers from 2014 through 2015 was “owed to the minimum wage.” Median wages for low-wage workers increased from $9.96 per hour to $11.14 per hour over that time frame, meaning the vast majority of the wage increase -- roughly 62 percent -- was the result of the minimum wage ordinance alone. From The Wall Street Journal:
Few ideas have been so thoroughly dismantled by reality as minimum-wage laws, which price some jobs out of existence and some workers out of jobs. Yet progressives keep expecting different results, and on Thursday Hillary Clinton endorsed a national increase. So let’s check in on the latest experiment: Seattle’s increase last year seems to be reducing employment.
That’s the finding of a new report by researchers at the University of Washington. The study compared nine months of 2015 in Seattle, where the wage is ticking up gradually and hit $13 an hour in January, with similar areas elsewhere in Washington. The authors produced a statistical model to figure out what Seattle would have looked like if the city’s planners hadn’t increased the wage floor.
The researchers found that the ordinance decreased the low-wage employment rate by about one-percentage point. Median wages went up for those who earned less than $11 an hour in 2014: to $11.14 at the end of 2015, from $9.96. Yet the study notes that only an estimated 73 cents of the increase is owed to the minimum wage.
None of this will surprise anyone who understands that increasing the cost of something will reduce the demand for it. Then again, that concept seems to elude both major presidential candidates, who have floated national minimum-wage increases. The results will be the same as in Seattle: Fewer opportunities for the people the law is intended to help.
When the University of Washington study was first reported by local Seattle outlets they touted the report as evidence the city’s economy is booming despite the minimum wage increase. Contrary to the Journal’s right-wing spin, The Seattle Times stated the report showed the wage increase had “little impact” on the labor market and that the “city’s job-growth rate has been triple the national average.” Meanwhile, Seattle Weekly used the report to debunk conservative predictions that the increase “would ‘devastate’ small businesses” and harm low-wage workers.
While the Journal falsely claimed the report proved right-wing media talking points against raising minimum wages, the researchers actually warned readers “to not interpret these results as likely to be generalizable,” cautioning that “these results show only the short-run impact of Seattle’s increase to a wage of $11/hour” because it will take many years for the full effects to be seen. The researchers also stated that “given the lack of standard errors in this draft, some caution should be used in confidently asserting that the Minimum Wage Ordinance caused an impact of a particular size.” In an August 10 op-ed in The Washington Post, economist Jared Bernstein found this lack of standard errors in the model a “limitation” and noted that economist Michael Reich found the calculations were “not distinguishable from zero” -- making the one percent difference between the city’s experimental and actual job growth possibly negligible.
It is important to note the university report did not find that the minimum wage increase itself was responsible for Seattle’s recent economic boom. Nevertheless, the report follows a trend of positive economic data out of Seattle, including research from Automatic Data Processing (ADP), which found that from mid-2014 to the end of 2015, “the Seattle labor market was exceptionally strong” and the city’s “job growth rate tripled the national average.”
Right-wing media are staunchly opposed to increasing the minimum wage at the local, state, and federal level and are dedicated to promoting the myth that wage increases result in job losses, despite a wealth of evidence showing that minimum wage increases have a negligible effect on employment.