Making Government Work

A Historic Minimum Pay Hike on the Horizon for One American City

May 8, 2014
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A Historic Minimum Pay Hike on the Horizon for One American City
Alex Wong/Getty Images
No other urban area in the world matches the proposed $15 an hour.

Want to reduce poverty? Increase the minimum wage. It’s that simple, say a handful of reports, and Seattle is on the verge of a city-wide raise.

On May 1, the mayor of the Pacific Northwest bastion announced an ambitious move to up the base wage there to $15 an hour — the highest of any major city worldwide, reports Quartz.

While workers cheer, a common business-owners’ lament is that increasing their costs will cut hiring and spur layoffs. But early data on a handful of areas that have boosted their pay scales suggests that businesses aren’t going under because of wage requirement bumps.

The bipartisan Congressional Budget Office (CBO) estimated that nudging the federal minimum wage from $7.25 to $10.10 would put $31 billion in the pockets of American workers, 19 percent of that going to families currently living below the poverty line.

At the same time, however, the CBO estimates that some 500,000 would lose their jobs. But San Francisco saw none of the bust and all of the boom when it raised wage minimums to $10.74.

“Our data show that an increase up to $13 an hour has no measurable effect on employment,” Michael Reich, a University of California, Berkeley economics professor, told the Seattle Times. The same for Santa Fe: The minimum wage — upped from $5.15 to $8.50 in 2004 — “seemed to have helped workers and not hurt business too much,” researcher Nicholas Potter told the newspaper.

Seattle Mayor Ed Murray‘s plan rolls out the increases over the next decade, and it still has to pass the city council. So while the local burger slingers can’t celebrate yet, they might be able to soon.

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