MYNORTHWEST NEWS

May be too soon to tell if minimum wage is impacting Seattle economy

Sep 2, 2015, 10:18 AM | Updated: 12:28 pm

Ivar's, minimum wage...

A waiter serves a customer at Ivar's Acres of Clams restaurant on the Seattle waterfront. (AP)

(AP)

The nation is closely watching how Seattle’s $15 minimum wage will affect the local economy and workers, prompting a few to make some strong claims.

Recently, Mark Perry, professor at the University of Michigan and member of the American Enterprise Institute, said Seattle is already losing jobs because of the wage increase.

Others, like financial expert Josh Frankel, disagreed with Perry’s assertion.

“So anybody that tells you that the minimum wage has been a tremendous failure, or success, at this point, doesn’t know what they are talking about,” asked Dave Ross on KIRO Radio’s Seattle’s Morning News.

“I would agree with that 100 percent,” Frankel said, after analyzing the data collected so far.

Seattle’s minimum wage, currently at $11, is on track to be $15 per hour by 2021. It’s an untested move, aiming to alleviate the cost of living in the city.

So when Perry said that data proves Seattle’s restaurant industry was suffering so soon, Frankel was left scratching his head.

“Professor Perry used a data set that he shouldn’t have used,” Frankel said, noting that Perry cited information from the Seattle-Tacoma-Bellevue Metropolitan Statistical Area. That statistical area includes King, Pierce and Snohomish counties.

“Those three counties have a population of 3.6 million people, versus Seattle city proper &#8212 which is really all we’re concerned about &#8212 with a population of 660,000,” Frankel said. “So you’re looking at an area with more than five times the population of your target area. That really just doesn’t work and you can’t infer anything from it.”

“Immediately after Professor Perry posted his data, that same series, which he shouldn’t have used in the first place, produced the single largest month-over-month gain in the series’ history,” he said. “It’s a noisy data set, it’s inappropriate, it shouldn’t’ have been used, and by the way, it came back to bite him in the butt.”

To truly have an understanding of how the minimum wage is affecting the city, Frankel knows exactly what must be done: wait. It will take time and patience for any proof of success or failure.

“I think we are in the very early stages, there is a long way to go,” Frankel said. “There is a study being taken at the University of Washington. It’s a multi-year, multi-faceted study. It will look at the effects in Seattle, over time. The final $15 minimum wage doesn’t even get phased in until about 2021, so there’s a long way to go.”

There are also other outside factors that may affect results, Frankel noted, such as a sharp rise in Seattle rent. Also, Seattle is rated second in the nation for the number of eateries offered per capita, according to data from Bloomberg. That means Seattle has more places to eat than most anywhere else in the country.

“It’s about 3,950 food-services establishment in Seattle,” Frankel said.

The saturation of the restaurant market could also affect the numbers once $15 per hour is finally reached. The only thing to do at the moment, is wait.

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May be too soon to tell if minimum wage is impacting Seattle economy