Jobs Endangered by a $15 Minimum Wage in Seattle

Both candidates in the Seattle mayoral race support an effort to raise Seattle’s minimum wage to $15 per hour.  Mayor Mike McGinn says he would even support an effort to set the minimum wage even higher.  Mayor McGinn and challenger Ed Murray are foolish if they believe that the Seattle mayor or City Council can ignore the laws of supply and demand.  A mandate that workers in lower paying occupations receive higher wages will lead to substantial job losses in these occupations.  The labor force in the city of Seattle is about one-third of the King County labor force and one fifth of the labor force in the Seattle metro area. This means that when Seattle laws make it more expensive to operate a restaurant, coffee shop, retail outlet or other business inside city limits, businesses will relocate to the suburbs and shoppers and customers will follow.

The economics of a minimum wage for a city is quite simple.  Employers in Seattle are price takers in the market for unskilled and less skilled labor.  It doesn’t matter how inelastic the demand for less skilled labor is in the aggregate, all that matters is the elasticity of demand for workers within city limits.  A large increase in the cost of hiring dishwashers or cashiers within Seattle merely shifts demand for these services to businesses outside city limits where the minimum wage is $9.15 and costs are lower.  The $15 minimum wage will destroy jobs in Seattle but will increase employment in some businesses in the suburbs.  The best substitute for shopping or dining in the city is shopping or dining in the suburbs.  Customers will be inconvenienced, unskilled workers in the city will be harmed and have to commute further to work.  However, business owners and unskilled workers in suburban areas could benefit from a $15 minimum wage in Seattle.

Mayors and mayoral candidates who support large increases in the minimum wage should also be required to specify which jobs in their cities would be endangered by their policies.  Following the International Union for Conservation of Nature which designates species as endangered, vulnerable or near threatened, I believe that politicians should acknowledge when their policies threaten the viability of certain jobs.  Politicians should also be required to use the same sort of designation to indicate the severity of the threat posed by their actions.  Politicians can make jobs extinct by raising the minimum wage so much that workers are priced out of the market for their services.

I propose that in Seattle:

  • A job is endangered if 90% of current workers earn less than the proposed $15 minimum wage.
  • A job is vulnerable if 75% of current workers earn less than the proposed $15 minimum wage.
  • A job is near threatened if 50% of current workers earn less than the proposed $15 minimum wage.

The Bureau of Labor Statistics (in its OES data) lists 637 detailed occupations in the Seattle metro area.   In 120 of those occupations, employing 27.7% (over 390,000 workers) of the workforce, the median wage less than $15 per hour.  The following tables provides examples of occupations that are most at risk due to a $15 minimum wage.

There are 16 endangered jobs in Seattle.  These jobs are endangered because at least 90% of workers earn less than $15 per hour.  The following table lists some of the most common endangered jobs.  For example, there are 25,930 food preparation and servers in the Seattle metro area and 90% earn $14.07 or less.  A $15 minimum wage will likely cause restaurants in Seattle to lose business to suburban competitors.  Other jobs on this list are endangered by information technology.  For example, as the cost of hiring hotel and motel clerks increases, more businesses will use kiosks and encourage customers to check-in online.

Endangered Jobs in Seattle

At Least 90% of Employees Earn Less   Than $15.00 per Hour

Occupation Title

Number of Workers

90th Percentile Wage

Food Preparation and Servers, Including Fast Food

25,930

$14.07

Personal Care Aides

9,100

$14.11

Dishwashers

5,080

$12.72

Dining Room Attendants and Bartender Helpers

5,010

$14.94

Home Health Aides

4,120

$14.65

Hosts and Hostesses, Restaurants and Lounges

2,930

$14.30

Hotel and Motel Desk Clerks

2,070

$14.82

Baggage Porters and Bellhops

1,070

$13.75

There are 33 vulnerable jobs in Seattle.  These jobs are vulnerable because at least 75% of workers earn less than $15 per hour.  The following table lists some of the most common vulnerable jobs.  For example, there are 12,590 cooks in the Seattle metro area and 75% earn $14.59 or less.  A $15 minimum wage will likely cause restaurants in Seattle to lose business to suburban competitors.  Other jobs on this list are vulnerable to technological change.  For example, as the cost of parking lot attendants and ticket takers increases, more businesses will use kiosks and other devices to substitute capital for labor.

Vulnerable Jobs in Seattle

At Least 75% of Employees Earn Less   Than $15.00 per Hour

Occupation Title

Number of Workers

75th Percentile Wage

Restaurant Cooks

12,590

$14.59

Food Preparation Workers

7,300

$13.71

Maids and Housekeeping Cleaners

7,280

$13.82

Counter Attendants, Cafeterias and Coffee Shops

6,900

$12.38

Packers and Packagers

5,740

$12.40

Childcare Workers

4,620

$12.28

Amusement and Recreation Attendants

2,990

$12.56

Cleaners of Vehicles and Equipment

2,740

$14.65

Parking Lot Attendants

2,670

$12.28

Taxi Drivers and Chauffeurs

2,230

$14.58

Ushers and Ticket Takers

1,510

$13.64

Manicurists and Pedicurists

1,370

$11.59

Lifeguards

1,220

$11.79

Laundry and Dry-Cleaning Workers

1,120

$14.15

There are 71 near threatened jobs in Seattle.  These jobs are threatened because at least half of workers earn less than $15 per hour.  The following table lists some of the most common threatened jobs.  For example, there are 47,390 retail sales workers in the Seattle metro area and half of them earn $12.13 or less.  A $15 minimum wage will likely cause shops and stores in Seattle that employ these workers to lose business to suburban competitors.  Other jobs on this list are threatened by technological change.  As the cost of stock clerks and order fillers increases, more businesses will use computer and information technology to substitute capital for labor.

Near Threatened Jobs in Seattle

At Least 50% of Employees Earn Less   Than $15.00 per Hour

Occupation Title

Number of Workers

50th Percentile Wage

Retail Salespersons

47,390

$12.13

Cashiers

26,110

$11.70

Stock and Material Movers

19,290

$13.76

Stock Clerks and Order Fillers

16,860

$13.84

Janitors

16,300

$13.74

Nursing Assistants

9,400

$14.43

Receptionists

9,270

$14.82

Security Guards

8,790

$14.02

Landscaping Workers

8,730

$14.36

Bartenders

7,610

$12.43

Counter and Rental Clerks

7,440

$13.57

Hair Stylists

5,500

$14.31

Bank Tellers

4,550

$13.58

Preschool Teachers

3,480

$13.69

Cafeteria Cooks

3,200

$14.82

Meat, Poultry and Fish Cutters

3,050

$11.43

Bakers

1,950

$13.56

Sewing Machine Operators

1,460

$11.65

File Clerks

1,360

$14.47

The mayoral candidates in Seattle may think they help workers in their city who are struggling in today’s economy by advocating a $15 minimum wage.  In fact, the mayoral candidates’ policies will harm the workers they would like to help.  These candidates tell Seattle residents that if they can’t find an employer willing and able to pay at least $15 per hour for their services, they will be prohibited from working inside city limits.  A $15 minimum wage in the city will cause Seattle residents to commute to the suburbs to work in stores, shops and restaurants. The only voters and businesses that should support this silly policy are those located outside Seattle city limits.

Comments

  1. Doesn’t that really depend on how valuable location is for many of these jobs, and how large the cost of labor stands as a fraction of their expenses? Some may be relocatable to the suburbs, but it may be wiser for many of them to stay put and pass the labor costs on their customers instead. Lots of the jobs in the $11-12/hr range on your tables look very location-sensitive.

    The potential for substitution by technology is a good point, but it really depends on how cheap that is compared to paying the higher wage levels.

Trackbacks

  1. […] Jobs Endangered by a $15 Minimum Wage in SeattleStephen BronarsThu, 10 Oct 2013 19:27:33 GMT […]

  2. […] would almost certainly push businesses out to nearby suburbs. Economist Steven Bronars has put together a list of more than 100 jobs within Seattle that would be affected. “The only voters and businesses […]

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