Creating Income Inequality in Seattle

So Seattle made a public policy change that caused lower-skill, lower-wage employment to lag way behind employment of wealthier, higher-skill folks.

One would expect the Progressive Left to freak out in opposition to this policy.  But in fact this policy is their absolutely most cherished, favorite public policy intervention -- the minimum wage.  As reported earlier, the city of Seattle engaged an economic study of the minimum wage change using some of the best data ever made available for such a study.  This was the result (table 3, in which I removed low-wage employment from all employment to get low wage and all other employment)

  • Maddog

    Then layer on to this land use restrictions, and zoning, which reward the older folk who own property, and penalize younger folk who do not.

    http://www.maddogslair.com/blog/wealth-inequality-is-driven-by-housing-costs-which-are-driven-by-local-and-state-government-regulations

    The chart in the article shows that housing has accounted for the lions share of Americans spending increase in the past 75 years. And the accumulation of wealth in these homes, mostly driven by urban growth boundaries, and other land use restrictions accounts for much, probably all of the wealth inequality in the nation. While wealth, and income inequality are different, they are related.

    Mark Sherman

  • joe the economist

    The 1992 card krueger study of the NJ/Penn fast food study (even with its mutliple flaws) showed that hours worked dropped when the minimum wage was increased.

    Next time Kruman touts this study as proof that increases in minimum wage doesnt negatively impact employment rates, you will know how dishonest krugman and the rest of progressives are.

  • SamWah

    No matter the outcome to the employees, raising the minimum wage is the (THE) desired outcome that trumps all quibbles!

  • me

    It's depressing to see leaders argue in a manner suggesting complete lack of understanding of economic principles based on a misguided sense of fairness. Yes, income inequality is a real issue for societies. No, wooden mallet style solutions don't work for all the obvious reasons.

    The regressive right is prone to the same lack of understanding, as examples like the idea that increased protectionism and taxation will improve the lot of American workers or suspending sex education will reduce teen pregnancies.

    Ultimately, this is what you get when you have well meaning and industrious but incompetent people making decisions.

  • StillAnOptimist

    Look at these results this way - By mandating/demanding a higher minimum wage, the very poor/unskilled will be slowly but surely driven away - and that will in effect "cleanse" the "environment" of the low skilled, poor "deplorables" - So the "do gooders" get their cake and eat it too - they can claim to be "generous" and "very helpful" while being generous and helpful to themselves as they abuse the most vulnerable and least able to defend/protect themselves. The idea that a wage (any wage) is the ticket to upward mobility is indeed dangerous to these self appointed do gooders who actually want people to suffer. (yea, they will deny that that is what they are doing - and how dare I question their generosity of spirit and crap)

  • Donald

    I didn't really read the study. But to be fair I wonder if the Obama care hours requirement played a bigger part in some of this than we suspect. Much like global warming fear Mongers believe that CO2 has a multiplier effect, is the wage increase mandate similar when coupled with Obamacare requirements coming in at the same time. These businesses are doing their best to reduce their hourly staff to under 30 hours. Then you add in a wage increase to a specific region and I think the business owners said move those jobs out of the city limits or eliminate them. They can't afford them anymore. Breaking point. But is that 100% on the wage increase? I don't suspect so. I think Obamacare played some part in the reduction of hours. If I'm right, dId the report factor that in is my question.

    But that narrative won't play in progressives world. You can't say that either one reduces actual work. Even though they both do.

  • Benjamin Cole

    There is now yet another pair of dueling studies on the impact of minimum wage laws on Seattle.

    Property zoning is not even discussed in either "study."

    Yet read this:

    "From Capitol Hill Seattle Blog

    "With Capitol Hill commercial rents also soaring, Seattle looks at tax breaks for landlords with small biz tenants

    Posted on Thursday, September 29, 2016 - 7:03 am by Bryan Cohen

    Since 2008, commercial rents have risen 42% in Capitol Hill’s 98122 zip code, making it the third most expensive zip code for businesses in the city. The second most expensive retail rents are now in 98102, while other neighborhoods, like Ballard, have seen retail rents increase by more than double.

    To ensure small businesses are not drowned out in the rising tide, Mayor Ed Murray convened a task force in April to explore what the city could do to help. The results, released during a Wednesday morning media conference, are relatively modest compared the mayor’s housing affordability plan, but Murray said it was an important starting point.

    Recommendations from the Commercial Affordability Advisory Committee include a new entity to support small businesses, tax incentives for property owners to keep small businesses as tenants, and “fast track” permitting requirements for small business projects. Defining what exactly constitutes a small business would still need to be determined, but the recommendations appear to target support for micro-business projects like Melrose Market.

    In the short term, the city will be directing $122,000 annually to a low-cost lending program for businesses with five or fewer employees and fund a commercial affordability consulting team to give businesses and small property owners technical advice. Not included in the recommendations — commercial rent control."

    ---30---

    Obviously, with a limited supply of retail space, Seattle could be rapidly gentrifying, and prosaic low-wage business moving out, forced out by higher rents. Commercial rents in some neighborhoods have doubled in recent years.

    Add on very tight and zoned housing markets, restricting the supply of labor.

    So wages may rise in Seattle, and minimum wage workers decrease as a share of the total, due in part to rents and the changing, mostly upscaling of the labor force and types of business that can afford Seattle, and not due to minimum wage laws.

    I encourage Coyote Blog to undertake property zoning is the evil of our day.

    You will fight a lonely and losing fight. The propertied and financial elites like property zoning, and lefties too for stifling development. No one wants free markets in their own neighborhood.

    If you really want to be seen as an oddball, argue for the decriminalization of push-cart, motorcycle-sidecar and truck-vending.

    I have been kicked off of "libertarian" websites for bringing up these issues.

    In conclusion, eliminating property zoning and the home-mortgage interest tax deduction would free up gobs of capital to build housing.

  • me

    Looks like the Seattle study had some bad systematic flaws (exclusion of a substantial portion of the collected data, poor comparison modelling). I still stand by my conviction that raising the minimum wage will have an exclusionary effect on the exact subpopulation it purports to help, but this study isn't the smoking gun.

    http://fortune.com/2017/06/27/seattle-minimum-wage-study-results-impact-15-dollar-uw/