There could be another explanation for the results, however: the fact that large employers are not included. It could be that even if employers with only a single location cut payrolls, large firms expanded at the same time, giving low-wage workers other opportunities to earn money.
Other researchers
have found that large employers are better able to raise wages in response to changes in the minimum. Liberal economists often argue workers have less bargaining power when negotiating their contracts at larger firms, and that as a result, employees at those companies are often underpaid in the absence of a wage floor.
"I think they underestimate hugely the wage gains, and they overestimate hugely the employment loss," said Michael Reich, an economist at the University of California, Berkeley who was part of a group that
published its own study of the minimum wage in Seattle last week.
Reich's study uses more conventional methods in research on the minimum wage, relying on a publicly available federal survey. His group's data did not allow the researchers to distinguish between high- and low-wage workers at a given firm, but they were able to separate large firms' locations in Seattle from those outside the city.
Their results from the University of California accorded with past research. The minimum wage increased wages for workers in the restaurant industry, without reducing employment overall -- in contrast to the findings from the University of Washington.
"Their results are so out of the range," Reich said.
One way of explaining the disagreement could be that small businesses in Seattle have been forced to downsize in response to the increased minimum wage, while larger firms have expanded.
Yet when Vigdor and his colleagues examined the overall number of workers at small firms with a single location, they did not find that employment had decreased. That fact could could suggest that small businesses have responded to the increase not by downsizing but instead by hiring more experienced workers.
