May 12, 2014
An Argument For A $15 Minimum Wage Now — In Seattle Because I wish the people working in Seattle well, I mostly oppose the $15 an hour minimum wage, whether it would be imposed immediately, or in a series of steps, with exceptions, as Seattle Mayor Ed Murray recently proposed.

I oppose it because I agree with most economists that such a wage would reduce employment, especially for unskilled young people looking for their first jobs.

But a smaller part of me values the data we would obtain from such an experiment, which is why I partly hope that Kshama Sawant wins and imposes that wage now.   There are, all over the United States, places in which you can cross a state line and find a higher minimum wage.  But I don't know of any place where the differential is as great as it would be in the Seattle area, if Sawant wins.  (The current Washington state minimum is $9.32; a $15 minimum wage would be 61 percent higher.)

Now suppose you are a businessman planning to start a fast food place, one that hires beginning workers at the minimum wage, and that you are going to locate it near where North 145th Street forms part of the city's northern boundary.  If you put your restaurant on the south side of 145th, you will have to pay your beginning, unskilled workers $15 an hour; if you put it on the north side of the street, you will have to pay them $9.32 an hour.  (In most such places, the more skilled, and more experienced, workers get a little more than inexperienced beginners, so you will have to pay them higher wages on the south side of the street, too.)

On which side of the street do you think you will locate your restaurant?

Now consider a larger example.  Some stores in downtown Seattle compete, directly, with stores in Bellevue Square.  For most people, even in much of Seattle, Bellevue Square is easier to get to, if you are driving.   The stores in Bellevue Square do have some minimum wage workers, and many other workers who get paid relative to the minimum wage.

Do you think that a $15 minimum wage in Seattle would increase Bellevue Square's advantages over downtown Seattle?

Finally, consider a high school dropout with no job experience and no commercially valuable skills, living in or near Seattle.  If this young man (or woman) came to you asking where they should look for their first job, after Seattle had imposed the Sawant minimum wage, what would you tell them, that they should look in Seattle or outside of Seattle?

An experiment on the scale that Sawant is proposing would yield data on those three questions, and many others.

You may think I am being a little cold-blooded, that I am treating Seattleites like the prisoners who volunteer to be test subjects for medical experiments.  I can only repeat that I do oppose the $15 minimum, and would only accept an experiment if the voters in Seattle approve it.  I advise them not to volunteer for this experiment, but would not stop them, even if I had the power.

(Conspiracy theorists may want to play with the idea that Sawant intends the $15 an hour minimum wage as an experiment, that she is working for some shadowy group of, for example, economists who want that data, and don't care much who is damaged by the experiment.)

Cross posted at Jim Miller on Politics.

(In February, the New York Times published an article, which you can read here or here, on the effects of a $1.85 minimum wage differential at the boundary between Oregon and Idaho.  You can find some commentary, with lengthy excerpts, here.)

Posted by Jim Miller at May 12, 2014 02:13 PM | Email This