Evan Soltas
Mar 17, 2015

Sleepless Over Seattle

Seattle's minimum wage will rise to $11 an hour on April 1, then to $15, and economists are watching. How will Seattle fare? Will businesses close and low-skill workers lose their jobs, or will business carry on and those workers get big raises?

These are questions that, in the tradition of the best research on the minimum wage, should be answered with lots of data and careful analysis. It's too bad, then, that some economics bloggers seem to have already made up their minds -- without, as best as I can tell, any data at all.

We need some better ideas than re-litigating anecdotal accounts in magazines and credulously quoting a think-tank report. Past research on the minimum wage has showed us that the effects are mostly felt in the food-service industry. As I suggested in Sunday's links, we should be watching food-service employment in the Seattle metro area. It's not a perfect measure, as the metro area goes beyond Seattle city limits, but it gets close. Another issue is the data only go up to December 2014.

For whatever it's worth, then, there's been no sign of a minimum-wage hit to employment:

Others have suggested using data from County and Zip-Code Business Patterns, which is annual and industry-level. So we'll have to wait on that one.

Let's try another idea. When businesses open and close, they have to get licenses. Seattle has data on restaurant licenses, and it has the advantage of matching the city limits. And it turns out that they post this data online -- in particular, they post counts of the number of licensed businesses for the most common industry codes, which include several types of food-service businesses. I was able to use the Internet Archive to pull up this list for several earlier dates.

With those resources, I put together the table below. It includes all of the listed categories in 722, the NAICS code for food services and drinking places, except for caterers. (I left caterers out as I don't think they're what we really care about here.) This table gets right to the supposed wave of restaurant closures in Seattle -- and I don't see anything yet.

There's been a slow decline in limited-service restaurants (read: fast food), and a gradual uptrend in full-service restaurants. The total number of food-services businesses rose over the last year.

Here's the bottom line: The current data don't show declines in food-service employment or in food-service establishments in Seattle. Maybe they will in the future, or maybe they won't. I will be watching both measures and will keep you posted.

Update (4/21/15): 1,911 limited-service restaurants (-6), 846 full-service restaurants (+18), 403 drinking places (+1), 430 mobile food sources (+15), 248 snack and nonalcoholic beverage bars (+2). Total NAICS 722 licenses: 3838 (+30). Thanks to Cato's Charles Hughes for the reminder.