Approximately 6,300 travel and hospitality workers near the Seattle-Tacoma International Airport will soon see their wages increase to at least $US15 per hourthanks to a ballot initiative that passed by just 77 votes, with about 6,000 ballots cast.
Opponents of the measure believe it will drive businesses away and hurt the local economy. Supporters of it believe that workers deserve a much higher wage and that it will convince other nearby communities to do so as well, eliminating the incentives for businesses to locate elsewhere.
The evidence on minimum wage increases is mixed and it’s not yet clear what impact it will have on the economy. It’s a huge increase from Washington state’s current minimum wage of $US9.32, but it’s also confined to an area that is already attractive for businesses thanks to the local airport.
The great part about this measure is that we can learn a lot from it. It’s a natural experiment to determine the effects of a major minimum wage hike. Do companies move away? Do they jack up prices? Do they cut back on labour? This ballot measure can now help us answer those questions.
This was one of the things that Manhattan Institute fellow Scott Winship stressed to me in our interview:
Ultimately, you can’t really figure out whether something is working or not without randomised experiments. We ought to institutionalize randomised experiments within the federal government by essentially allowing waivers for pretty much anything that the federal government funds. Allow states to make all sorts of policy choices or policy changes to programs like food stamps or TANF or SSI for instance and evaluate them in a rigorous way. We ought to find what works and defund what doesn’t work.
Implementing a $US15 minimum wage nationally could have disastrous effects, but we really don’t know what would happen. Instead of taking that risk though, we can use states and towns as labyrinths to test the idea to find out if it is effective.
That’s why it’s great to see this ballot measure pass. It will provide us with ample evidence for larger policy decisions.
The same can be said of Switzerland’s referendum for an unconditional basic income. There are strong arguments on either side for whether this will work or not. Ultimately, we don’t have enough evidence to know for sure. Implementing it in the United States would be incredibly risky as it’s not just a major policy change, but also an untested one.
This is why Megan McArdle, who opposes a universal basic income, said, “Overall, I’d really like to see Switzerland pass this, if only so we can observe the effects.“
The United States cannot simply implement radical policy ideas without numerous other towns, states or countries trying them first. But that doesn’t mean those radical policies wouldn’t be successful in the U.S. It just means that we need other people to test them first – including other communities in the United States. That’s exactly what the region near the Seattle Tacoma International Airport is doing. We should be thankful for it.
Business Insider Emails & Alerts
Site highlights each day to your inbox.