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Member Research and Reports

Member Research and Reports

Washington Report Finds No Evidence of Price Increases after Seattle’s Initial Minimum Wage Increase

Before Seattle increased the minimum wage, many local businesses said they planned to raise prices in order to cover higher payroll costs. One year after the wage hike took effect, researchers have found scant evidence of any impact on prices – good news from a public health perspective.

Jennifer Otten_ASPPH
[Photo: Dr. Jennifer Otten]

“Our preliminary analysis of grocery, retail, gasoline, and rent prices has found little or no evidence of price increases in Seattle relative to the surrounding areas,” wrote researchers from the University of Washington Schools of Public Health and Social Work and the Daniel J. Evans School of Public Policy & Governance.

The report included in-depth interviews with a number of low-wage workers trying to raise families and make ends meet, said co-investigator Dr. Jennifer Otten, assistant professor of nutritional sciences in the UW School of Public Health. “Many of them told us they expect higher wages to make a difference in terms of helping them buy food and other basic necessities,” she said.

But the workers have also been worried their pay hikes will be offset by higher market prices and declines in benefits – such as housing vouchers and Supplemental Nutrition Assistance Program benefits – as their income goes up.

“We know higher incomes are linked to better health and quality of life,” Dr. Otten said. “What we don’t know is how much of an increase these workers will experience because of potential offsets in other areas. For example, will their increase in income be enough to see long-term gains in diet and chronic disease outcomes? To gain an understanding of these relationships, we are closely tracking data, such as supermarket prices, and asking families about their purchases.”

The researchers – known as the Seattle Minimum Wage Study Team – presented preliminary findings in a report to the Seattle City Council on April 18. Researchers were hired by the city to conduct an evaluation of the wage hike, which took effect April 1, 2015. Seattle was one of the first cities in the nation to raise the minimum wage, with plans to gradually increase it to $15 an hour by 2017.

The University of Washington team surveyed more than 500 Seattle businesses, interviewed 55 workers, and collected price data from the web and through in-person visits to grocery stores, restaurants and other retail spots.

“According to the USDA, about 90 percent of households do their preliminary shopping at a supermarket or supercenter,” Dr. Otten said. “Our preliminary data comparing supermarket prices in Seattle and King County at same-chain supermarkets, found virtually no difference in prices between Seattle and King County or before and after the initial minimum wage increase.”

Researchers noted that broader price increases may come down the road, and they plan to continue their research, pending funding.

Link: http://hsnewsbeat.uw.edu/story/nutritionist-explores-effect-areas-minimum-wage-change