Seattle Minimum Wage Study Has Serious Flaws (washingtonpost.com)

"Remember the story from last week about how the new Seattle minimum wage law was hurting workers?" writes Slashdot reader PopeRatzo. "Well, it turns out that there are some problems with the study's methodology." The Washington Post reports: First, their data exclude workers at businesses that have more than one location; in other words, while workers at a standalone mom-and-pop restaurant show up in their results, workers at Starbucks and McDonald's don't. Almost 40 percent of workers in Washington state work at multi-location businesses, and since Seattle's minimum wage increase has been larger at large businesses than at small ones -- right now, a worker at a company with more than 500 employees is guaranteed $13.50 an hour, while a worker at a company with fewer than 500 employees is guaranteed only $11 an hour -- these workers' exclusion from the study's results is an especially germane problem (note that low-wage workers in Seattle have had an incentive to switch from small firms to large firms since the minimum wage started rising).

In earlier work, in fact, the University of Washington team's results were different depending on whether these workers were included in their analysis; including them made the effects of the minimum wage look more positive. Second, the University of Washington team does not present enough data for us to assess the validity of its "synthetic control" in Washington -- that is, the set of areas to which they compare the results they observe in Seattle. The Seattle labor market is not necessarily comparable to other labor markets in the state, and given some of the researchers' implausible results, it's hard to believe the comparison group they chose is an appropriate one.
Suggesting Seattle's booming labor market may have skewed the study's results, two nonpartisan economists concluded it "suffers from a number of data and methodological problems that bias the study in the direction of finding job loss, even where there may have been no job loss at all." And the Washington Post also notes the researchers' findings are suspiciously "out of step with a large body of research," including another study from U.C. Berkeley researchers [PDF] which determined Seattle's wage increase "is having its intended effect."

Comments

Re:yet it still makes sense

[Anonymous Coward]

Your intuition is wrong. More money circulating means more demand for the companies services, so they hire more people to meet that demand. By increasing the minimum wage you have increased the velocity of money in the economy.

Re:Investigative study "smells"

[mspohr]

The discussion is about giving people enough money to afford food and shelter, not limiting their potential earnings.
However, I could see that this suggestion might be good for corporate executives to limit their pay. Several countries/jurisdictions have actually implemented rules that limit executive pay to some multiple of the lowest wage their company pays. Usually it's a factor of less than 100.

That is not a valid counter point

[aepervius]

That is from various polls from non cited source in a text book (" I include a table of propositions to which most economists subscribe, based on various polls of the profession") and limiting the scope of the proposition in the poll on young people is suspicious. What is the overall effect for example is not cited. And frnakly polls are useless they only represent what people EXPECT, they do not represent what study finds.

Call me crazy but I am untrusting your blogspot source about polls, and expect peer reviewed litterature, just for the reason that at least peer review and publishing allow to uncover the flaw cited in the summary.

Re:So they basically confirmed the study was corre

[deathguppie]

Mom and Pop places are not required to pay the new minimum wage in Seattle. That is the problem with the study. It doesn't include employees actually making the new minimum wage. Seriously, SlashDot used to be a place for intelligent discussion.