Seattle food jobs ‘soaring’? At only 0.67% growth last year and by several comparisons, ‘anemic’ seems more accurate
Writing in Forbes, Erik Sherman writes an article with the bold headline “Seattle Food Jobs Soar After $11 Minimum Wage Starts.” Sherman reports BLS employment data showing that the “Net gain from January to November was 900 [Seattle food] jobs,” which is displayed graphically in the top chart above (light blue line). Further, Sherman writes:
It’s impossible to say that the increased minimum wage, or anticipation of the hike, had no influence on the number of food jobs. Perhaps restaurant employment would have grown faster (although that would have been out of step with the overall historical trends in the area). Maybe some number of restaurateurs or food franchise owners gave up and closed shop with increased wages adding to other pressures. But what is clear is that the $11 minimum wage failed to crush restaurant employment as opponents apparently hoped to prove.
If Seattle food jobs are really “soaring,” I guess the main question would be “soaring compared to what?” And by several different relevant comparisons, I come to a much different conclusion: food jobs in the Seattle have actually stagnated quite dramatically starting in January of last year (see top chart above). Consider that in 2013 net Seattle area restaurant hiring increased by 6% followed by a nearly 5% growth in restaurant employment in 2014. In contrast, restaurant jobs in rest of the state increased by 3.6% in 2013 and actually fell by -0.2% in 2014. On May 1, 2014, the Seattle city council passed a $15 an hour minimum wage law that mandated increases to $11 an hour on April 1, 2015 followed by further increases to $13 an hour starting last week and $15 an hour next January 1 (the phase-in schedule varies by business size and fringe benefits provided). So it would make sense that Seattle restaurant owners, some anticipating pending increases in labor costs of 62% for minimum wage employees (from $9.25 an hour in 2014 to $15 by as early as next January), would cut back on hiring starting at the beginning of last year – and that’s exactly what we see in the top chart above. Here are some other observations about the data trends highlighted in the three charts above:
1. As Sherman acknowledges, there’s been a +900 job gain at Seattle area restaurants in the first 11 months of last year. But on a percentage basis that’s only a 0.67% increase in food employment last year. Is that “soaring?” And again the most relevant question would be “soaring compared to what?” Well, let’s start by comparing Seattle restaurant job gains to the rest of the state (subject to a minimum wage of $9.47 an hour both last year), where restaurant jobs increased by 6,700 jobs last year and by a whopping 7.7% — or 11.5 times the growth rate of Seattle restaurant jobs. Food jobs “soaring”? Certainly in the rest of the state, but definitely not in Seattle!
2. The second chart above highlights the differences discussed above (7.7% growth for non-Seattle restaurant jobs in Washington state vs. 0.67% for Seattle last year) and provides some additional comparisons to help address the question: “Soaring compared to what?” On a national basis, restaurant hiring increased by 2.7%, which was more than four times the 0.67% growth in Seattle restaurant hiring last year. Some addition context is provided by comparing Seattle restaurant job growth of 0.67% last year to overall payroll job growth over the same period for the Seattle area (2.2%, or 3.3 times the Seattle restaurant employment), the entire state (2.0%, or 3 times Seattle restaurants) and the country (1.5%, or 2.2 times Seattle restaurants). Therefore, we could conclude that Seattle restaurant jobs (at 0.67%) are not “soaring” compared to: a) restaurant job growth in the rest of the state (7.7%) and the country (2.7%) last year or b) compared to overall payroll growth in Seattle (2.2%), the state (2.0%) and the US last year (1.5%).
3. How does Seattle MSA restaurant job growth of 0.67% last year in the new era of the “$15 an hour Seattle minimum wage” compare to previous comparable periods historically? The bottom chart above displays Seattle area restaurant job growth during the period between January and November in each of the 26 years back to 1990 (earliest year available). Except for years during recessions (1991, 2001, 2008 and 2009), Seattle restaurant job growth at 0.67% last year was the weakest year for hiring in the last quarter century! Seattle food jobs “soaring” last year? Certainly not compared to any of the past non-recessionary years since 1990!
Bottom Line: Seattle is leading the national movement toward imposing a $15 minimum wage on America’s employers who hire unskilled and limited experience workers, including restaurant workers. Many restaurant owners in the Seattle area are facing $5.80 an hour (and 62%) increases in their labor costs as the city’s minimum wage goes from $9.25 to $15 an hour. It shouldn’t be surprising then that the city on the leading edge of “Fight for $15” experienced sluggish growth in area restaurant hiring last year. By a number of relevant comparisons, Seattle food jobs are really not “soaring,” but have demonstrated very weak growth starting in January of last year. Compared to the growth last year in food jobs in the rest of the state (+7.7%) and the rest of the country (+2.7%) as demonstrated in the top two charts above, and compared to previous years over the last quarter century (see bottom chart above), the 0.67% growth last year in Seattle restaurant payrolls can’t be described as “soaring.” Terms like lackluster, feeble and anemic seem more accurate based on the data displayed in the three charts above.
Related: Among academic and professional economists, nearly three-quarters (72%) oppose a $15 an hour federal minimum wage and only 5% strongly support it, according to a recent survey conducted by the University of New Hampshire Survey Center.
Update: In response to several comments from “John of the Prairie/John A.” I present the new chart below of restaurant jobs in Seattle’s neighboring state of Oregon and its major city – Portland. Oregon has a uniform state minimum wage of $9.25 ah hour that was in effect last year and will stay the same this year. How do food jobs in Portland compare to the rest of the state when there is no difference in minimum wage? Well, as might be expected there’s not much difference when there’s no significant different in labor costs.
For example, in the last four full years (2011-2014) restaurants jobs in Portland grew at rates of 2.3%, 4.7%, 3.7% and 5.3% , which were comparable to food job growth rates in the rest of the state of 2.1%, 3.6%, 4.3% and -0.4%. In the first 11 months of last year, Portland food jobs grew at 3.3% vs. 3.9% in the rest of the state. Therefore, in Washington’s neighboring state of Oregon, which has a uniform state minimum wage, we see similar growth rates in restaurant jobs in the state’s major city (Portland) and the rest of the state outside Portland. That’s a much different restaurant job pattern that we see in the state of Washington (top chart above), where there is a significant departure in restaurant employment growth rate following the passing of a city minimum wage in Seattle that raised labor costs for city restaurants well above the rest of the state.