Employer Responses to a City-Level Minimum Wage Mandate: Early Evidence from Seattle

Abstract

A growing number of cities and counties have recently raised their minimum wages. How employers respond to these mandates provides insight into the impact such policies might have on workers and local labor market. Drawing on two survey waves tracking initial responses to Seattle’s $15 Minimum Wage Ordinance by 439 employers with low-wage workers, we show how employers adjusted to higher wages. Most commonly, firms raised prices (56% reported this); smaller percentages reduced employee headcount or hours, limited internal wage progression, or took other measures. Single-site Seattle employers responded similarly to those with multiple sites. Food and accommodation sector employers were more likely to raise prices than firms in other sectors. Relative to other ownership structures, franchises disproportionately reported reducing their workforces. Very few employers reported withdrawing from Seattle. Overall, initial employer responses to this city-level minimum wage law align with predictions from the literature, findings that highlight trade-offs that policy makers must consider in future local wage regulation.