Seattle Minimum Wage Study
University of Washington · Seattle, WA, United States · 2016
Summary
The University of Washington study of Seattle's minimum wage increase found a counterintuitive result: average earnings for low-wage workers fell as employers reduced hours faster than wages rose. The finding was disputed by a UC Berkeley study using a different methodology that found no employment or hours reduction. The methodological debate — how to construct the counterfactual for Seattle — illustrates the difficulty of causal inference from policy rollouts, and why pre-specified synthetic control designs and randomized variation (when available) are superior to retrospective observational studies.
Research question
"How did Seattle's minimum wage increase from $9.47 to $13/hour affect low-wage workers?"
Methodology
Intervention
Seattle raised minimum wage in two steps; study used administrative payroll data to track affected workers
Assignment
Difference-in-differences with synthetic control (not randomized)
Sample size
All covered workers in Seattle (~4.6 million quarterly worker-employer observations)
Primary outcome
Hours worked; total earnings; employment
Effect estimate
Hours worked fell 9%; average earnings fell $125/month for low-wage workers at $13 level; employment effect near zero
Decision
Ongoing policy debate; findings contested by subsequent studies using different methods
Result
Mixed
Hours worked fell 9%; average earnings fell $125/month for low-wage workers at $13 level; employment effect near zero
Evidence strength
Moderate
Quasi-experimental design; causal interpretation requires care.
Replication status
Open for replication
Institution
University of Washington
Location
Seattle, WA, United States
Year
2016
Policy area
Financial Services
Mechanism
Price signal