One Year Later, Seattle’s Raising Wages, Not Prices

Seattle began the first phase of its plan to raise its minimum wage to $15 an hour last April, putting it on track to have the highest minimum wage in the country. Now, a year later, new data shows that the local economy has continued humming along, despite the change.

Critics of raising the minimum wage warned of dire consequences: that costs would spike and there would be an exodus of jobs from the area. Nearly two-thirds of businesses surveyed directly after the new minimum wage ordinance passed said they would have to raise prices to keep up.

Yet a year into the project, there is no indication that the Seattle economy has been ravished by the incremental increase to the minimum wage, and last month, a report from researchers at the University of Washington found “little or no evidence of price increases in Seattle relative to the surrounding areas.” 

When the Seattle City Council approved the new minimum wage, to be instituted gradually until it reaches $15 in 2021, it also commissioned the University of Washington researchers to monitor the effects of the increase

Their preliminary findings show that prices at grocery stores, gas stations, apartments and retail establishments have all remained steady.

The only sector in which the researchers did find a slight rise in prices was at restaurants. Yet these prices mirror those in other nearby cities with lower minimum wages, suggesting that other factors may be influencing this market.

The increase to the minimum wage also doesn’t seem to have caused any huge loss of jobs, and Seattle’s unemployment rate remains well below that of Washington overall.

The private payroll firm, Automatic Data Processing (ADP), which analyzes private-sector employment data, recently gave Washington state the highest score in the nation for combined job and wage growth for the fourth quarter of 2015.

This suggests that far from driving businesses away, Seattle’s higher minimum wage may actually be boosting wages in surrounding areas as businesses compete for workers.

Seattle’s new minimum wage directly helps approximately 100,000 people—or roughly one in five workers. It gives them more purchasing power and helps keep them off public assistance. Raising minimum wages around the country would help millions more.

There may yet be modest increases in prices as Seattle implements the full $15 an hour wage.

However, as the Fight for 15 campaign has shown, many people say they don’t mind paying slightly more for goods and services if it means workers can earn a living wage. The good news out of Seattle is that right now, they don’t even have to.


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