Is Seattle's Minimum Wage Hike Doing More Harm Than Good?

Jul 1, 2017
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SCOTT SIMON, HOST:

Can the push to increase the minimum wage come at the expense of those it's meant to help? A continuing study from University of Washington that the city of Seattle commissioned after voting to raise the minimum wage to $15 an hour three years ago has found that increasing hourly pay did not affect the number of low-wage jobs. But it has reduced the hours those workers are employed, costing them about $125 a month in earnings. We're joined now by Congressman Adam Smith of Washington state. He represents part of Seattle. Mr. Smith, thanks so much for being with us.

ADAM SMITH: Well, thanks for the chance for having me on.

SIMON: Has this legislation cost the workers it's meant to help?

SMITH: Well, the most interesting thing I found from the University of Washington study is they said they left out large employers. And I don't see how the study on the impact of the minimum wage can be comprehensive if you leave out large employers. You've got a company like Walmart who could clearly afford to do more without it having any impact on their bottom line. It didn't.

On the other hand, if you've got a small, family-run restaurant in the international district, they're in a slightly different situation. How do you strike that balance? The minimum wage is, I've always felt, an imperfect instrument. It does help. But there are a lot of other things that need to be done to go at that income gap that is having such a damaging impact on the middle class.

SIMON: But let me get back to this study because I'll point out that it pointedly included both liberal and conservative economists because it wanted to be definitive. And you talk about leaving out large employers. I know it left out franchise food employers for a number of reasons. I mean, I've got to ask - are you - is there any study that will convince you this wasn't the idea you thought it was, or are you just going to wait for a study that agrees with your ideas?

SMITH: Yes, Mr. Simon. I am, in fact, a moron. And I'm just going to go ahead and disagree with everything. No. As I said, there's more to it.

SIMON: I think that's a fair question.

SMITH: Well - but I explained. In terms of the total impact on businesses and the total impact on wage earners, if you leave out large employers, then it is misleading. Now, as I said, to answer the first question, I think it's very illuminating in terms of the impact it has on small employers. And I think it should inform us in terms of trying to figure out what the right minimum wage is. I was not actually directly involved in what happened in Seattle, but the people who were phased in the minimum wage for smaller employers.

SIMON: Yeah. This is going in, I guess, three increments, if I'm not mistaken.

SMITH: Yeah. I mean, gosh, back in the city of SeaTac, I always used this example. My father was a ramp serviceman at United Airlines. Last year he worked was 1985. He made $16 an hour with full benefits and six weeks of vacation. Until we passed the $15 minimum wage in SeaTac, that same job was a minimum wage job with no benefits. And the minimum wage was $9.37 an hour.

So, basically, over the course of 30 years, you've got a person doing the same job, inflation going up. Their wages - half of what they were. So if your conclusion from this is the minimum wage is a waste of time and shouldn't be part of our approach to income inequality, then I think you're wrong. And, yes, I'm going to say that not because I'm just blindly trying to find something that agrees with me but because I'm actually analyzing the data.

SIMON: Do you still support what I gather will be the third jump to $15 an hour from $13?

SMITH: I don't know yet. I would tend to think yes. But I think this study should give us pause. The problem is - coming back to United Airlines. You got a guy like Jeff Smisek who ran the company into the ground and got fired and got $30 million going out the door. So, you know, how we get to a fairer place on the economy is going to be a constant challenge. And we are not always going to get it right. But all these business people who come along and say, just leave us alone and let us do our thing, and everything will be fine - that has not been my experience.

SIMON: But when you, - you know, a lot of people have - talk about things like executive compensation and the outrages many people see it, aren't you getting a long way away from the limited question about the effect of raising the minimum wage? Because I don't think you're seriously proposing some kind of, you know, limitation on executive pay that's going to pass Congress.

SMITH: Well, I certainly would. Corporations exist because the law allows them to exist. So I guess the problem with this interview is you want to ask me about the minimum wage and one study about one piece of it and get me to say, well, this proves the minimum wage doesn't work. I think the interview ought to be about, what are we going to do to close the income gap between the rich and poor? And we ought to take this study as one piece of information that informs us about how to go down that path.

SIMON: Congressman Adam Smith of Washington state, thanks so much for being with us.

SMITH: Thank you. I appreciate the chance. Transcript provided by NPR, Copyright NPR.