Why Understanding Economics Is So Important

I have a visceral feeling towards anyone named Ed Murray, and the current mayor of Seattle is no exception:

What happens when you pay university researchers to study the results of your untested policy (a massive minimum-wage hike) and they deliver results you weren’t expecting?

You try to destroy their credibility, of course.

Seattle Mayor Ed Murray, who by Seattle standards is considered a “conservative,” asked University of California-Berkeley researchers to denounce and rebut the study the city commissioned from University of Washington researchers before it was even made public.

Berkeley researchers had earlier released another study of Seattle’s minimum wage, which jumped to $11 an hour in 2015 and $13 in 2016, that found “employment in food service … was not affected” by the wage hikes (they studied “food services” as a proxy for minimum-wage jobs at large).

The UW study, by contrast, used cross-industry data on “work hours” that were not available to the Berkeley researchers, a much deeper set of information that is only available in Washington and three other states:

Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.

The More You Know.