Only Seattleites Get to Decide Whether Seattle’s $15 Minimum Wage Succeeds or Fails

Construction cranes dot the skyline of Seattle, north of Skunkworks HQ

I recently took some time to preemptively fend off future attacks on Seattle’s $15 minimum wage ordinance, pointing out that our local economy is currently so outlandishly strong that there’s almost nowhere for unemployment to go but up. Seattle’s current 3.15% unemployment rate has never proven to be sustainable in the past, and is unlikely to prove sustainable into the future. So when we do eventually see a bump in unemployment—and we will (be it in absolute terms or just relative to the larger state economy)—it will on its own be evidence of absolutely nothing. As I explained last week:

The real measure of Seattle’s minimum wage experiment is not whether our jobs numbers tick up or down relative to some cherry-picked starting point or some arbitrary low-wage city comparison. The real measure of success is whether Seattle can sustain a reasonably healthy and robust economy while providing all our workers a livable wage.

And if that seems like an intentionally vague metric, well, that’s exactly the point: I reject the very notion that numbers alone can provide an objective measure of what is ultimately a subjective experience.

For example, let’s say through some sort of statistical magic you really could divine that Seattle’s unemployment rate would otherwise be a half point lower if not for the “disemployment effect” of our higher minimum wage. Would that prove our $15 minimum wage a failure? Or might Seattleites be perfectly willing to choose, say, a $15 minimum wage and 3.65% unemployment over a $10 minimum wage and 3.15% unemployment?

Of course, we make economic choices like this all the time. Charged with balancing inflation versus unemployment, the Federal Reserve has long tilted toward maintaining low inflation, routinely adjusting interest rates and money supply accordingly. The fed could choose to raise its inflation target above 2% in pursuit of a tighter labor market and higher wages. But despite decades of stagnant wages, it hasn’t.

Here in Seattle we have made a different choice. We have chosen to pursue a more livable wage for all our workers, and while we don’t believe that $15 will adversely affect our local economy, in the same way that the Fed is willing to accept modestly higher unemployment in exchange for lower inflation, Seattle is willing to accept the same consequences in exchange for higher wages. How much unemployment would be too much? I’m not exactly sure. But that’s for us to decide, not some free market propagandist at a DC think tank cherrypicking food service employment data.

Writing in The Stranger back in March 2014, Nick Hanauer and Eric Liu described our high-wage economic model as “Cascadian Capitalism:”

The fundamental law of capitalism is that when workers have more money, businesses have more customers. Raising the minimum wage shifts money in the economy to those with the highest propensity to spend, increasing sales for businesses, which in turn leads to hiring, and more sales.

… The danger we have to face is that economic inequality always begets political inequality, which always begets more economic inequality. Low-wage workers stuck on a path to poverty are not only weak customers, they’re also anemic taxpayers, absent citizens, and inattentive neighbors.

To put it in the affirmative, we have a chance now with $15 to make Seattle as civically robust as it already is economically. We have a chance to set off a virtuous cycle in which economic participation begets civic participation. True prosperity doesn’t trickle down from above, and neither does great citizenship. Both are middle-out phenomena.

Of course, if other cities—say $7.25-an-hour havens like Houston, Charlotte, and Atlanta—would prefer to pursue a low-wage trickle-down economy, that’s up to them. And if they’re happy with the result, that’s up to them too. But given the choice, I’m confident most Seattleites would choose Cascadian Capitalism over Confederate Capitalism any day of the week.