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Seattle Businesses Predicted They’d Raise Prices as a Result of the Minimum Wage Hike. In Reality: No.

The University of Washington Evans School for Public Policy and Governance has completed the first round of a study of the effect of a rise in the minimum wage in Seattle, Washington.  This inventive study followed two steps.  In the first step, immediately after the 2015 passage of the minimum wage law in Seattle, UW researchers surveyed Seattle business owners.  In that survey, 62% of employers echoed conservative pundits predicted that they would raise prices.  In the second step of the study, researchers measured actual changes to prices from 2015 to 2016 in the city and the surrounding communities.  Summing up this second phase of study, researchers declared, “Our preliminary analysis of grocery, retail and rent prices has found little or no evidence of price increases in Seattle relative to the surrounding area.”  In other words, employer fears associated with local minimum wage hikes have not matched reality.  As more cities hike their local minimum wage in response to federal inaction, it will be interesting to see if this pattern is repeated.

16 thoughts on “Seattle Businesses Predicted They’d Raise Prices as a Result of the Minimum Wage Hike. In Reality: No.”

  1. Dave says:

    Indeed it will be interesting to see. Jim, you say that “immediately after the 2015 passage of the minimum wage law … researchers surveyed Seattle business owners.” Immediately after is not the best time to do the research, and the folks at UW should know better, as it will take time for things to shake out; time they obviously did not allow for. A better indicator would be a survey taken 12-18 months from the passage of the bill.

    1. Jim Cook says:

      Dave, they surveyed for employer predictions immediately after. Then they returned to see what actually happened one year later.

      1. Dave says:

        Thanks.

        1. Dave says:

          I did read today on investors.com that after touting the $15 minimum wage law in California UC Berkeley fired 500 workers. Basic econ says when the price goes up, the demand goes down. Berkeley already had budget problems, and like Sen. Ted Kennedy famously said at a National Press Club gathering “the bottom-feeders” would always find compliance with minimum wages difficult. Well, looks like UC Berkeley may be a bottom feeder.

  2. Al Hopfmann says:

    The article missed the real issue: Should employers and employees be able to freely negotiate compensation and working conditions with each other, or should the government and mandatory-membership unions be able to make the determinations for them?

    1. Jim Cook says:

      Read a Charles Dickens novel?

    2. J Clifford says:

      Well, so long as you don’t mind slavery, sweatshops, and starving workers, I’d say the free market option sounds just great, Al.

      1. Stephen Kent Gray says:

        J, we’re talking about wage work which is by defintion not slavery. Please stop always bringing up slavery when talking about things unrelated to slavery. An employer plays and employee for a job. It’s the exact opposite of slavery.

        I oppose slavery because I oppose the principle of coercion in human relations. I would instead have all coercion replaced by freely agreed to contracts without any coercion in the process. Relationships, in and of themselves, don’t both me as long as they are based on freely made contracts without coercion. Even the relationship of State to citizen should be subject to these rules, but that is for another day.

        http://en.wikipedia.org/wiki/Non-aggression_principle

        Coercion, force, fraud, slavery, theft, etc are all bad things. People should only be able to offers options and take options freely without any coercion preventing people from their negative liberty and negative rights.

        Ludwig von Mises and the Ludwig von Mises as well as its Daily blog are all good reads as well as all other Austrian Scholl economists.

        Also, and surrounding communities? They diluted the study by saying prices didn’t rise in nearby places where the minimum wage wasn’t raised so that even if they did in Seatles, they chooses places without the minimum wage as well so the price raises in Seatlle would be hidden in the study. Why not just study Seattle itself and not the surrounding cities?

        1. Jim Cook says:

          What word do you use to refer to the large number of absolutely unpaid internships that people are coerced into accepting by employers taking advantage of a difficult job market?

          You say “I oppose the principle of coercion in human relations.” Do you oppose the glut of unpaid internships in corporate America?

          1. Stephen Kent Gray says:

            People voluntarily take unpaid internships as they are job experience programs like free education and job training for a future job. There is no coercion involved as none is kidnapping people or pointing guns at people to become unpaid interns.

          2. J Clifford says:

            There is no coercion in unpaid internships?!? Seriously???

          3. Stephen Kent Gray says:

            http://plato.stanford.edu/entries/coercion/

            I found this Stanford University paper on what coercion is. Thanks to Wikipedia for giving me the link and Stanford University for having a Stamdard Encyclopedia of Philosophy.

            Also, I want people to read Brian Patrick Mitchell’s Eight Ways to Run the Country, so I won’t give the quote in the event me not giving the quote finally gets people to buy and read the book because they are so curious about what quotes I’m not giving.

            Coercion isn’t all the things people say when they use “coercion” in modern day slang as coercion has a strictly defined definition as seen in dictionaries. People use “coercion” to mean stuff like social pressure, advertising, upbringing, structure, disapproval, wheedling, manipulation, and lots of stuff that arent coercion.

          4. Jim Cook says:

            If coercion only means kidnapping and pointing guns at people, then what you say is true. But of course that restrictive definition of coercion is ridiculous.

          5. Stephen Kent Gray says:

            http://plato.stanford.edu/entries/liberty-positive-negative/

            This links goes into detail on the negative liberty/rights parts defending my positions on what coercion is. I linked it in another article, but since it wasn’t linked here, I linked it again.

            I would also quote Brian Patrick Mitchell’s Eight Ways to Run the Country, but by not quoting it, I want you to buy the book and read it yourself. It’s a great read, even if the author is a Paleoconservative borderline Theoconservative.

      2. ella says:

        Well, J Clifford, as you say slaves were – and are – paid employees, then things have not really changed. Some slaves are paid over $100,000 a year, some are paid less than $5000 a year. Then there was paid medical care and housing by the employer. Now it is sometimes paid insurance that may not cover anything and housing if the employee can find any affordable – or the government pays for it. Then it labor costs were based on the profit of goods sold minus the cost of care for slaves. Slaves had some opportunity for improvement, but most did not. Now it is based on the value of labor and the fair market price for goods. Some have an opportunity for improvement, but most don’t. Is that how it really works? No today a person can change jobs a will. Even change the type of work done and change location to find employment.

  3. John mcgowan says:

    Was there any negative impact from an increase in the minimum wage? How many restaurants close their doors once the minimum wage increase took effect?
    I notice a common theme here of the evil corporation making huge profits on the backs of workers. What about the income of unions on the backs of people forced to contribute, isn’t that comparable except workers are not given the choice to have their dues withheld.

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