Study: 34% of Capitol Hill-area workers make under $15 an hour, 100K+ low-wage in Seattle

From the UW study

From the UW study

More than a third of all workers in Capitol Hill, the Central District, and southeastern Seattle make less than $15 an hour, according to a recently released study commissioned by Mayor Ed Murray.

A team of University of Washington researchers examined the city in five regions and found that 34% of residents in “Capitol Hill/South East Seattle” earn low wages ($15 an hour or under) — the second highest percentage within each of the five regions. However those  workers represent a relatively small portion of low wage workers throughout the entire city — around 17%.

At least 100,000 workers in Seattle earn less than $15 an hour, according to the UW study, including 32,000 who make the $9.32 Washington state minimum wage. Overall, the researchers found that enacting a $15 an hour minimum wage in Seattle would raise the wages of nearly a quarter of all workers in the city. While the study provides the most comprehensive look at the realities of minimum wage workers in Seattle, it relies heavily on data from 2007. The insights are hoped to be part of a week of progress in moving a plan for addressing income inequality in Seattle forward.

“Increasing the minimum wage is one of the most important decisions I will make as Mayor,” Murray said in a statement about the studies and this week’s minimum wage symposium at Seattle University.

The studies were released just in time for the Thursday income inequality symposium at Seattle U, where researchers will present their findings. The symposium will also feature panelists from around the country and is intended to provide guidance to the mayor’s Income Inequality Advisory Committee, which has an April deadline to provide Murray with recommendations on raising the minimum wage.

Attendance is free and open to the public, but registration is required. In case you can’t afford to take the day off work, CHS will be there to report back.

At Monday’s City Council meeting, council members Kshama Sawant, who last weekend softened her stance regarding a possible phase-in and mitigations for small businesses, and Tim Burgess passed around this New York Times opinion piece on the benefits cities have seen when they raise their minimum wage. Its authors, a pair of UC Berkeley professors who co-authored the second study commissioned by Murray, argue employers across the country have successfully absorbed minimum wage increases and that those wage hikes create positive local impacts:

Our research and that of other scholars illuminates how businesses actually absorb minimum wages at low-wage industries. Higher standards have an immediate effect in reducing employee turnover, leading to significant cost savings. Minimum wage increases do lead to small price increases, mainly in restaurants, which are intensive users of low-paid workers. How much? A 10 percent minimum wage increase adds 0.7 cents on the dollar to restaurant prices. Price increases in most other sectors, like retail, are too small to be visible, partly because retail pays more than restaurants.

You can hear more from Michael Reich and Ken Jacobs, co-authors of the book When Mandates Work: Raising Living Standards at the Local Level, when they present the findings of their city commissioned study at Thursday’s symposium.

Capitol Hill business owners have weighed in on how a proposed $15 an hour minimum wage would change their business. Among the not-so-surprising graphs and tables found throughout UW’s 107-page study was an interesting bit of hypothetical math. Researchers developed three hypothetical businesses (retail, restaurant, and medical) and calculated how a $15 an hour minimum wage would effect their bottom line.

The food service business was given 19 full-time employees with 12 of those making under $15 an hour. After a $15 an hour wage hike, researchers found payroll for the business would increase 23%. If payroll is one-third of the business cost, that amounts to around an 8% increase in total costs for the restaurant. Researchers warned the model is simplistic and does not account for some big factors, including raises for employees already making over $15 an hour.

The study also found Seattle’s food and hospitality industry ranks the lowest in its ratio of wages-to-jobs. The  industry employs 9.5% of all workers in the city, but only accounts for 3.4% of wages. By comparison, the tech industry represents 11% of workers who took home 17% of total wages in the city.

In order to get a closer approximation of how many low-wage workers actually live on the Hill today, CHS took at look at 2012 Census data to investigate.

In the 98122 area code (south of Denny, including Central District) around 28% of households have an income below $25,000 (due to bracket breakdowns, the roughly $12.50 an hour income comes closest to approximating Seattle’s current $9.32 an hour minimum wage). The same income level holds for 17% of households in 98102 (north Broadway area, Eastlake) and 12% of households in 98112 (east of 14th, Montlake, Madison Park). The numbers rise several percentage points in “nonfamily households.”

A $15 an hour minimum wage on Capitol Hill may also bring more of the neighborhood’s increasingly expensive apartments into reach for low wage workers. Based on figures recently reported by CHS, a worker making $15 an hour today falls just short of being able to “afford” a median priced studio apartment on Capitol Hill. CHS recently found that the median rent for a Capitol Hill studio apartment was $1,000, based on a survey of 70 apartments listed on Craigslist. Affordable housing is typically considered housing that costs at or below 30% of household income.

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8 thoughts on “Study: 34% of Capitol Hill-area workers make under $15 an hour, 100K+ low-wage in Seattle

  1. 70% of workers who identified in this study as American Indian/Alaskan Native earn below $15/hr. The next highest group is 49% of earners that the study identifies as Hispanic.

    So basically the current system exists in such a way that if you are AI/AN you have a 7/10 chance of earning below the proposed minimum wage. 75% if you’re a woman, 66% if you’re a man. And yet there is a small group of privileged owners (several with a hand in more than one business) who are trying to erase and avoid discussing the race and social justice impacts of an arbitrarily depressed wage.

    I think this is what is most galling to me when I hear people say “a better wage won’t improve issues of income inequality” and “well, there are tons of people getting less than $15/hr and they’re fine” and “well, we compensate people in other ways”. We’re looking at actual statistical proof that low wages and diminished economic opportunity actually gravely harm groups and yet the conversation is how best to save the profits of people who have had the benefit of loans, financing and basic respect that thousands of people in this city aren’t even given?

  2. One thing that would help is ditching our ridiculous tipping system and pay food servers a decent wage. You know, like the rest of the developed world. Yup, menu prices would go up…but then no tip.

  3. Interesting to note that the Berkeley study says multiple times that their studies of other jurisdictions cannot be used to predict outcomes in Seattle because the $15-now scenario is much more than any other that has happened.

    I’m also very surprised to see that the costs were so strongly offset by decreases in turnover and very, very small price increases. That’s very positive news if it holds true. The positive impacts on those employees who need it the most are clear. But it’s also concerning to see that in San Francisco, while retail employment stayed steady, national retail chains increased their presence, implying that small local business were replaced.

    • Yes, I mean small shops frequently have limited lines of credit, tighter payment terms and more at risk of waves in the business climate(including wage hikes) whereas big box retailers that want to be someplace can displace those to a degree by automation or other across the board savings(dumping health care and sending them to exchanges).

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