As most of you know, Seattle has raised its minimum wage to $15/hr. It follows the airport town of SeaTac doing the same, and has made more tangible the federal government’s to raise it to roughly ten dollars an hour by making it seem more modest.

The minimum wage has become a battlefront on the subject of inequality. Even some who support raising the minimum wage to $10 are more skeptical of the higher figure. Even inequality guru Thomas Piketty is concerned.

One of the advantages of having our decentralized systems is that I can eagerly await the results – whatever they are – without having to face any negative consequences if it does turn out to be a bad idea. I feel the same way about Vermont’s flirtations with single-payer.

The other advantage to having a decentralized system is that it can take advantage of what being a good idea in one place can be done there, but other places don’t have to follow suit. If we’re going to try an extremely high minimum wage somewhere in the country, Seattle is actually a pretty good candidate. The high cost of living makes a $15 minimum wage easier to justify than in a city like Boise or Denver. It also has a booming economy, lots of money, and a lot unemployment rate.

Further, Seattle is actually not all that large. It’s city population is above Nashville but below El Paso and Forth Worth. What we think of as “Seattle” is actually a clump of cities. But the minimum wage hike will only apply to Seattle. This could be good if it allows some of the low-wage amenities to exist just beyond city limits but still be accessible to the city’s population. It could be a bad thing if it drives out some jobs. Since Seattle is expensive, though, and more expensive than most of the area that surrounds it, it could make it harder to discern overall effects.

If things go well in Seattle, or are assumed to, we should be wary about talking about rolling it out nation-wide or using it as a justification to angle a national minimum wage towards $12 or something. But if successful in Seattle, then it’s definitely something that similar cities like San Francisco and New York should (and undoubtedly would) look at. These places are far more expensive to live in, and given those employers that are still there are so despite increased costs, it could be that there is quite a bit of inelasticity involved.

Dave Schuler’s concerns, though, are probably pretty well-founded:

I can believe that a $15 minimum wage in Seattle where the unemployment rate is 5.3% can be absorbed by the local economy. Seattle’s local minimum wages incentivizes politicians in Chicago where the unemployment rate is 10.6% to push for our own $15 minimum wage and here it might well throw people out of work or make it harder for them to find work. Not to mention driving businesses on which the poor depend out of the city or even out of the state.

Chicago politicians can always deny responsibility on a “hoocoodanode” basis.

Everyone’s watching.


Category: Statehouse

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