One Year On, Seattle Explores Impact Of $15 Minimum Wage Law
ARI SHAPIRO, HOST:
Now, let's dig deeper into what has happened in Seattle, one of the first big cities to pass that $15 minimum wage law. That happened in 2014. Joining us now is Jacob Vigdor, a University of Washington professor who's running a city-funded study on the minimum wage law. Welcome to the show.
JACOB VIGDOR: Thanks for having me, Ari. It's a pleasure to be here.
SHAPIRO: And so Seattle is phasing in the minimum wage law over time. It's going to hit $15 an hour in a few years. So far, what have you seen with the wage hike?
VIGDOR: So far, as of January 1 of this year, the large employers in Seattle are now paying $13 an hour, and the smaller businesses get to pay a little bit less. So far, the impacts seem to be not too great here. We've seen some impacts on prices, but in terms of employment or other sorts of things, not too much.
SHAPIRO: So things are not costing a lot more. Employment is not dramatically dropping. It doesn't look like people are getting laid off because of the wage hike. What about people who were making the minimum wage who are now making more money? Has it had much impact on them?
VIGDOR: Yeah. Our study has involved doing interviews in depth with a number of low-wage workers who are trying to raise families and make ends meet, and they are telling us that the higher wages are making a difference. They are helping people buy food and just the basic necessities of life, but I'd say that they are skeptical. They're worried that prices are going to go up and the income that they receive is going to be offset by higher prices. A lot of them are receiving benefits in the form of housing vouchers or SNAP benefits. And the value of these benefits declines as your income goes up, so some of them are telling us that they're not really sure that these higher wages are going to lead to a better quality of life for them just because of these potentially offsetting impacts.
SHAPIRO: Now, as we mentioned, this law is being phased in incrementally. Do you think's making a difference rather than all at once bump everybody's wages up to $15 an hour?
VIGDOR: Yeah. One of the things that Seattle did, they phased it in overtime, and they implemented different phase-in schedules depending on the size of the business. And both the business owners and the workers that we've talked to are sort of appreciating the fact that, for a small business, going straight to 15 would have been much more difficult. So this extra time allowing people to figure out, what is my new business model now that I'm going to face higher labor costs - I think that has really helped blunt what might have been a pretty big impact had it all happened at once.
SHAPIRO: Do you think there is enough information to state clearly what the impact of a national $15 or $12 minimum wage would be?
VIGDOR: No, I don't think that I can say that with any degree of certainty. What I can tell you is that to think one minimum wage is going to have the same impact everywhere at all points in time, that's not really consistent with what we're observing so far. Higher minimum wages are thought of as a way to maybe allow some of the spoils and the profits of society to be distributed towards the lower-income workers. And spreading those profits and that wealth around, it's a lot easier in a town like Seattle, where there is some wealth to spread. And it might not work so well in a place that is uniformly higher poverty, doesn't have as many of these tech sector jobs or other types of high-income employment to make it all work. So that is one thing that I can tell you. We are going to be paying close attention. One thing that we have heard from employers is that the minimum wage is working just fine for them now, but that's not necessarily going to hold the next time a recession comes along.
SHAPIRO: That's Jacob Vigdor, public policy professor at the University of Washington and director of the Seattle minimum wage study. Thanks for joining us.
VIGDOR: Thanks for having me, Ari. It's a pleasure.
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