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Is The Seattle Minimum Wage Law Really "Off To A Bad Start" For Restaurants?

It's too soon to tell, but a recent AEI analysis doesn't tell the whole story.

Getty Images/Andrew Burton

This past Sunday, conservative think tank American Enterprise Institute reported that 1,300 Seattle restaurant jobs were lost between January to June of this year, the largest number lost in that span since the Great Recession of 2009. It uses this "negative effect" to make the bold suggestion that Seattle's new minimum wage law is "getting off to a pretty bad start." Eater dug deeper into the data that AEI used and pulled out some other statistics you may want to consider before coming to a conclusion about the new law.

For starters, while reporting the loss of 1,300 jobs from January to June, AEI fails to note that employment actually increased by 800 people from May to June, leaving the overall industry employment just 200 people short of levels when the first wage hike went into effect on April 1. It's too soon to tell whether that trend will continue, but it certainly warrants mentioning.

SOURCE: Federal Reserve Bank of St. Louis

It's also important to note that the -1,300 jobs figure represents just a 0.96 percent drop in overall jobs during the six months in question. It does not seem unexpected to have a little short term disruption with a new regulation of this type.

Additionally, even though overall industry employment is down from January, the overall employment in the industry in June was still 300 people higher than it was in December 2014, just before the Washington State minimum wage hiked to $9.47 at the beginning of the year.

AEI fails to note that employment actually increased by 800 people from May to June, leaving the overall industry employment just 200 people short of levels when the first wage hike went into effect on April 1.

From a longer term perspective, industry employment is still up by 24,100 from the Great Recession low of December 2009, which means that the jobs that were lost since might not have even existed a little over five years ago. That's little consolation to the people who lost those jobs, but it's statistical proof that the industry is still overall stronger than it was in the late 2000s.

Let's provide additional context from San Francisco, another city where the minimum wage is also on track to reach $15. Using the same St. Louis Fed data, note that when San Francisco hiked its minimum wage to $11.05 in January (from $10.74), it experienced a larger than normal drop in restaurant employment from December to January. Those numbers then rebounded by June, even after a second wage hike to $12.25 in May. Will Seattle rebound as well? It's impossible to say, yet, but again, our city's one month rise from May to June shouldn't be ignored.

Finally, it's important to acknowledge is that the St. Louis Fed data on which the AEI is relying covers the larger Seattle area, spanning Bellevue and Tacoma (the San Francisco data, likewise, includes Redwood City and South San Francisco), and the minimum wage is lower outside of Seattle proper. That may not significantly impact the data, but again it's worth noting.

The bottom line, again, is it's too soon suggest that the minimum wage increase in Seattle is "getting off to a pretty bad start," and the AEI report doesn't include a macro view of what's happening. It will certainly be interesting to watch how all the numbers continue to unfold over time.