Seattle’s Booming Economy Is, Apparently, A Mirage

seattle minimum wage unemploymment

Seattle: A fever dream we’re all trapped in?

Hot takes! Get your hot takes! Forbes contributor Tim Worstall has one cooling on the windowsill and you’d better grab it while it’s steaming.

Actually, even if you don’t read it today, it’ll still steam because, like warm garbage on a summer day, his consistent beat regarding the economic calamity of a higher minimum wage is only getting more ripe as time goes on.

Today, Worstall has chosen to launch an attack (kind of?) on a new paper about a year-old study. But does he refute it with evidence? Or data? Or, dare I ask, economic reasoning?

Nope! He just disagrees with it.

First let’s read the initial article that Worstall has decided to launch in on. It’s a really solid, illuminating paper by Jeannette Wicks-Lim about a study she co-authored in January of last year about the minimum wage’s impacts on the economy, and how raising the minimum wage changes consumer and employer behavior.

The current state of research on this employment question, however, finds that minimum-wage increases do not produce significant job losses. This then raises an important policy question: Why haven’t there been significant job losses when minimum wages have increased?

First, the basic law of demand actually says something quite different and more specific than just “if the price of something goes up, the quantity demanded of that thing goes down.” It actually says that if the price of something goes up—and nothing else changes—the quantity demanded of that something goes down. In the real world, however, other things are changing all the time. Moreover, raising the minimum wage itself causes businesses to change how they operate (more on this below). As a result, the minimum wage’s actual impact on jobs depends on what other factors are changing at the same time.

Well now, that sounds like a reasonable understanding of the economy. And so nuanced! But of course, Tim Worstall does not deal in nuance—and he swiftly rejected this paper in its entirety. He writes:

That’s not in fact the current finding. Which is, rather, that modest minimum wage increases seem to have modest effects. Which isn’t all that surprising; most modest things do have modest effects. But we can indeed see the effects of past minimum wage increases. We see them in the unemployment rates of teens and other disadvantaged in the American economy.

It’s not? Are you sure? It’s hard to say, as Worstall doesn’t actually cite any “current findings,” but we know of a few. Like this one and this one and also the entire history of the United States or even Tim Worstall himself. But let’s not trouble ourselves with data or facts, because Wortstall doesn’t. Let’s look at his other compelling arguments.

When Wicks-Lim uses our favorite PSBJ piece of the last year—the one that quoted business owners in their own words—to demonstrate that Seattle businesses are doing fine, Worstall pulls out the big guns.

“Actually, no” he disagrees, “we don’t quite have the detailed information yet that we would like, but we do have something indicative.”

Something indicative like all the new businesses we’ve added? Or perhaps he’s referencing this recent study from the University of Washington which found that the data “show no significant impact” on price levels and thus, no increased economic hardship being passed on to workers?

No, it’s likely (we know from past experience) that Worstall will point to the flawed economic findings of AEI, wherein economist Mark Perry attempted to demonstrate that Seattle has seen slowed growth since the beginning of the city’s march to $15. Of course, there’s one huge problem with Perry and AEI’s assertions—they notably used the Seattle region (where minimum wage is still below $10), and not Seattle proper. The region’s population is about 3.6 million; only around 650,000 can expect to be paid a higher minimum wage due to the city ordinance.

Again, there’s no way to know, as Worstall provides no data aside from his opinion that this simply cannot be true. Meanwhile, here on the ground in Seattle, it seems that our increased minimum wage has failed to result in fire and brimstone and the collapse of the local economy. And yet, somehow, Worstall comes to the conclusion that “in each area that has that higher minimum wage, we are seeing slower restaurant wage growth than in areas without that higher minimum wage.”

Which means there’s only one real possibility here: All of us here in Seattle are simply dreaming. We have fabricated this mythical city wherein a moderate, gradual increase of the minimum wage does not, in fact, completely level the city and lead to a giant spike in unemployment. We are all imaging Seattle and only Tim Worstall and his omnipotent, data-resistant feelings about the situation can possibly indicate the truth.

Comments

comments

Hanna Brooks Olsen
Hanna Brooks Olsen is a reporter in Seattle. Her writing about the economy and politics has appeared in the Atlantic, the Nation, Salon, Fast Company, and elsewhere.