When the city of Seattle, Washington, raised its minimum wage to $15 per hour in 2014, many critics predicted that the move would end in disaster for a lot of the city's businesses. But that hasn't happened. Instead, studies show the increase has largely benefited the city's low-wage workforce without causing drastic changes to employment.
Other metro areas are following suit. Between 2013 and 2018, New York City gradually increased its minimum wage from $7.25 per hour to $13.50 per hour. At the beginning of this year, it raised the minimum wage to $15 per hour for all businesses with more than 10 employees.
Supporters of minimum wage hikes nationwide say that increasing the minimum wage helps the economy by putting more money in the pockets of low-wage workers, spurring further spending and growth. Opponents worry that increasing costs on businesses, especially low-margin businesses like restaurants, could lead employers to cut jobs.
But so far, it appears that the law is working as intended by raising wages for the city's low-income workers without costing them their jobs.
Wage growth for New York City's full-service restaurant workers has increased by as much as 23% from 2014 to 2018, and by up to 30% for limited-service restaurant workers, according to an August study by the National Employment Law Project (NELP) that focused on the city's restaurants because they employ a high number of low-wage and minimum wage workers.
Meanwhile, restaurants in New York City have seen their sales increase by an average of nearly 7% every year in that time frame. Over the five-year span that New York City increased its minimum wage, its restaurant industry also experienced job growth of more than 20%.
Restaurant workers aren't the only ones affected by the minimum wage increase. Across all private industries, employment growth was still 15%, implying that the minimum wage increase didn't stunt job growth in other sectors, either.
Nicole Hallett, an associate professor of law at the University of Buffalo who studies labor and employment law and the author of a recent op-ed focused on New York City's minimum wage, tells Grow that the data being collected proves doubters wrong, at least in certain cities.
"Early research was mixed," Hallett says of the $15 minimum wage. "But recent studies have shown that it hasn't had the negative effects that were feared."
Not all restaurant workers are convinced that a $15 minimum wage is a good idea. Joshua Chaisson, a board member of the advocacy group Restaurant Workers of America, says that some in the industry worry that increases to the minimum wage, either beyond $15 per hour or in other cities, could end up backfiring.
Chaisson, a longtime server and bartender, says that some restaurant workers worry that higher labor costs could trigger unintended negative consequences. Many restaurants resort to raising prices, which can lead some consumers to dine there less frequently or order less. The main concern is that some restaurants could soon become too expensive for some consumers, resulting in lost earnings for servers relying on tips, or even the loss of jobs.
New York City restaurants have been increasing prices, according to the NELP report. Since 2014, the price of food purchased in restaurants there has risen by almost 3% every year, compared to inflation of 1.3% for all items. So far, though, higher prices haven't been dissuading diners.
Cities like New York and Seattle are among the most expensive places to live in the entire U.S. They have robust economies and many of the people who live there are highly paid white-collar workers with disposable income, so residents may not be as price-sensitive as those of other areas.
Researchers say that is likely why a relatively high minimum wage works in those cities, whereas it may not in others.
"People say, 'That's not going to work in Topeka or Wyoming,'" Hallett says. That may be true: "All the research says is that in some places, a $15 minimum wage and a drastic rise in the minimum wage to $15 per hour hasn't had a negative effect. That doesn't mean it would work everywhere."
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