Increasing The Minimum Wage, Creating Jobs, And Funding Social Security

Last November voters in Washington state overwhelmingly approved Initiative 1433 to increase the minimum wage and establish a statewide standard for paid sick days. Initiative 1433 raised the minimum wage to $11.00 on January 1, 2017. That was an increase of $1.53 from what it was on December 31, 2016. That’s a 16% raise.

It is relevant to ask: What was the impact of this increase on jobs? After all, economists predict, using simple theoretical modeling, that an increase in the minimum wage will result in a decrease in jobs.

In early March the Washington state Department of Employment Security released January employment data – perfect information for calculating the impact of the minimum wage! It makes the most sense to compare job data from January 2016 with job data from January 2017, to take into account seasonal variation. (You can imagine there is a big change in shopping after the December holidays!)

That 16% increase in the minimum wage does not seem to have made much of a dent in jobs. In fact, the unemployment rate fell from 4.9% to 4.2%. Jobs increased between 2016 and 2017. Employment grew by over 100,000 jobs statewide.

For even greater relevance, let’s look at employment in Snohomish County, north of Seattle. In this county, there were no local minimum wages higher than the state minimum of $9.47 (as opposed to Seattle). So the full weight of the $1.53 increase, or over 16%, was assumed by employers. What happened? Employment in Snohomish County grew by 16,000 jobs.

How about in occupations in which minimum wage workers are clustered, like retail jobs? In retail, jobs grew by almost 16,000 jobs between January 2016 and January 2017. There were 1,000 more jobs in retail in January 2017 than in December 2016 – that…

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