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«The Seattle Minimum Wage Study Team1 University of Washington April 2016 Daniel J. Evans School of Public Policy & Governance University of ...»

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REPORT ON BASELINE EMPLOYER SURVEY AND WORKER

INTERVIEWS

The Seattle Minimum Wage Study Team1

University of Washington

April 2016

Daniel J. Evans School of Public Policy & Governance

University of Washington

Box 353055

Seattle, WA 98195

School of Social Work

University of Washington

Box 354900

Seattle, WA 98195

School of Public Health

University of Washington

Box 357230

Seattle, WA 98195

Suggested Citation:

The Seattle Minimum Wage Study Team. 2016. Report on Baseline Employer Survey and Worker Interviews. Seattle. University of Washington.

The team investigators are Jacob Vigdor, Mark Long, Jennifer Romich, Scott W. Allard, Heather D. Hill, Jennifer Otten, Robert Plotnick, Scott Bailey, and Anneliese Vance-Sherman. Any opinions expressed in this report are those of the investigators and not the University of Washington or any other affiliated organization. To contact the Seattle Minimum Wage Study Team, email mwage@uw.edu.

Executive Summary This document is the first in an anticipated series of reports regarding The Seattle Minimum Wage Study (SMWS). The Seattle City Council commissioned the study as part of Council Resolution #31524, adopted by unanimous vote on June 2, 2014. The resolution called for the City to contract with a group of academic researchers to conduct a rigorous and comprehensive evaluation of the City's minimum wage ordinance, passed by the Council that day. In December 2014, the City executed a contract with the University of Washington to conduct this evaluation.

Seven UW faculty, in collaboration with two economists from the Washington Employment Security Department, comprise the SMWS investigator team. This report summarizes the findings from the baseline data collection from employers, workers, and area prices. The findings reported here are descriptive and do not examine the short- or long-run impacts of the Ordinance on businesses, workers, or the local economy.

Employer Survey Over 500 randomly-selected Seattle businesses responded to a survey designed to capture their knowledge of the Ordinance at the time it went into effect in April 2015, and what effects they anticipate.

The majority of Seattle employers surveyed (92.1%) were aware of the Ordinance in Spring 2015, yet at that time were less certain about how the Ordinance phased in. More than 20% of all firms reported minimum wage levels higher or lower than the Ordinance required, with more than 10% of respondents reporting that the Ordinance required them to pay a $15 per hour minimum wage as of April 1, 2015.

Seattle employers most commonly reported responding or planning to respond to the Ordinance by raising wages for Seattle employees, raising prices on goods and services, and increasing wages for employees earning between $11-$15/hour.

Seattle employers also commonly reported a number of other anticipated changes to business operations as a result of the Ordinance. Many believed employee morale would improve and more individuals would apply for job openings. Overall, Seattle employers do not anticipate improvements in productivity among minimum wage workers.

Employers’ survey responses show a wide range of responses at the point when the Ordinance first went into effect in April 2015. A short follow-up survey in the coming months will assess how perceptions of employers have shifted in the year that followed.

Worker Interviews This report provides preliminary results from one wave of interviews with 55 workers in the City of Seattle during the first year of the implementation of the city minimum wage law. This component of the SMWS is designed to capture detailed experiences and perspectives of workers likely to be affected by the minimum wage. We plan to conduct in-depth interviews with the same workers three times in a period of three years, with follow-up phone calls between interviews.

Our sample was recruited at community organizations and in public spaces throughout Seattle. At the time we recruited them, the study participants were all working for less than $15 per hour in the City of Seattle, had annual incomes less than $50,000 per year, and had children in the home.

They are a diverse group in terms of their race/ethnicity, nativity, marital status, and the industry and occupation in which they work.

The first wave of interviews, conducted between February and November 2015, focused on the circumstances of work and family life, as well as the workers’ knowledge and opinions about the

Seattle minimum wage ordinance. Our key findings are:

• Nearly all the workers in the study knew about the Seattle Minimum Wage ordinance, but most had vague or incorrect knowledge.

• Those aware of the law generally had positive or ambivalent opinions.

• Many workers expressed doubt that the law would fundamentally alter their financial situations.

• The low-wage earners in our sample relied heavily on substantial government and community assistance.

• Despite receiving assistance, most workers in our study struggle to “make ends meet.”

Price Analysis

We have engaged in a number of activities to track the existence and magnitude of price increases over time. Starting before the minimum wage increased on April 1, 2015 we in some cases have more than a year's worth of data to examine. We have collected price data through a combination of online "web scraping" and in-person visits to area grocery stores, restaurants, and other retail locations.





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.

Table of Contents

1. Introduction

2. Survey of Seattle Employers

3. Interviews with Seattle Workers

4. Price Analysis

5. Appendix A: Employer study sample selection, survey response, and eligibility

6. Appendix B: Worker Study Demographics

7. Appendix C: Price Analysis

8. Appendix D: Study Personnel and Partners Acknowledgments Thank you to the over 2,000 Seattle employers who responded to our screener and survey, as well as the workers who participated in interviews.

Thanks to the Laura and John Arnold Foundation, the Russell Sage Foundation, and the City of Seattle for the funding and support.

Partial support for this study came from a Eunice Kennedy Shriver National Institute of Child Health and Human Development research infrastructure grant, R24 HD042828, to the Center for Studies in Demography & Ecology at the University of Washington.

Introduction

This report describes the findings of efforts to survey several hundred Seattle businesses and interview dozens of low-wage workers employed in the City. These baseline surveys and interviews were conducted mostly from January to May of 2015, around the time the City minimum wage first increased to $11/hour. They capture some of the characteristics of adults employed in low-wage work in Seattle, and of the businesses that rely on them. The surveys and interviews reveal how businesses and workers expected a higher minimum wage to impact their operations or livelihoods. Because they were conducted at such an early stage in the process of raising the minimum wage, they are not designed to reveal the actual impact of the minimum wage.

The next anticipated report in this series, to be released in the coming months, will use administrative records from the Employment Security Department to closely examine the impact of the $11 wage on measures of employment, hours, and earnings for the majority of workers employed in the City of Seattle. Impacts will be inferred by comparing trends in these measures before and after the April 1, 2015 wage increase to trends in nearby areas, and to trends in previous calendar years when the minimum wage did not increase on April 1st.

The report is organized as follows: the first section summarizes the employer survey, and the second the worker interviews. It concludes with a brief commentary on price trends, which were the subject of a study released in January but hold relevance given the findings of both the employer survey and worker interviews.

SURVEY OF SEATTLE EMPLOYERS2

Background The initial phase of the SMWS conducted a survey of employers with business licenses in the City of Seattle. The Survey of Seattle Employers (SSE) gathered information from local businesses and nonprofits with workers subject to the Minimum Wage Ordinance. Survey questions collected information about business models, employment practices, and finances at the time the Ordinance was implemented. The survey also collected information about how employers understood the phase-in of the Minimum Wage Ordinance, self-reported initial responses to the Minimum Wage Ordinance, and self-reported plans for how firms may respond to the Minimum Wage Ordinance.

This 2015 survey sets a baseline from which future responses can be compared. Subsequent survey waves will collect similar information from the same set of employers, providing information about how the Ordinance may be affecting employers over time. SSE and subsequent surveys provide insight into employers’ beliefs about how changing the minimum wage affects their workers and businesses; the UW study team will also examine employment records as reported to the state, Census data, and similar sources to triangulate employer reports about changes in employment and profitability.

About the Survey The UW research team developed and pilot-tested the survey instrument in early 2015. A random sample of Seattle for-profit firms and non-profit organizations was drawn from the City of Seattle business license directory, with oversampling of firms in industries with a high proportion of lowwage workers or those likely to be particularly affected by the wage ordinance: accommodation and food service; retail trade; and manufacturing. Thus, the random sample of was drawn from a sampling frame of 29,702 Seattle business license holders. While the sample includes both forprofit firms and non-profit organizations, we refer to all survey respondents in this report as “firms” or “businesses.” After a phone screening, a subset of firms with Seattle employees were invited to complete a 20minute phone or web survey that collected baseline information about current numbers of Seattle employees, business practices including compensation, and knowledge of the Minimum Wage Ordinance. The survey period spanned January to May 2015, the period before and immediately after the time the Ordinance went into effect. A total of 693 randomly-sampled businesses completed the survey for a response rate of 66.1% of those contacted.

This report focuses on 567 employers that affirmed having workers earning less than $15 per hour on the screener or the survey. Data in this report are based on unweighted survey responses, meaning that every survey response is counted equally. Weighted analyses show largely similar results. Appendix A contains further details on sampling and analysis methodology.

This section was authored by Romich,J., Allard,S., Althauser,A., Buszkiew, J. and Obara, E.

Initial Survey Findings Characteristics of Survey Respondents.

FIGURE 1: WOMEN, MINORITY, AND Survey results are based on responses

IMMIGRANT OWNERSHIP AMONG

from 567 employers of Seattle

RESPONDENTS

employees earning $15 per hour or less. Most responding employers fall 25% 21.2% into the “small employer” category as 20.5% established by the Minimum Wage 20% Ordinance; 88.1% report having fewer 13.8% 15% than 500 employees. The majority (55.4%) consider themselves to be 10% “family-owned.” A total of 9.5% of respondents reported they were 5% franchises. Additionally, of the 567 0% respondents, 60 (10.5%) reported to Woman-owned Minority-owned Immigrant-owned be non-profit organizations.

Figure 1 shows that responding employers include many women, minority- and immigrant-owned firms. Respondents to the survey reflect the diversity of business ownership in Seattle, with over one fifth of the respondents reporting women- or minority-ownership.

Most Employers Aware of the Minimum Wage Ordinance. The Survey asked employers if they were aware of the City of Seattle minimum wage requirements that took effect as of April 1, 2015. The vast majority, 92.1%, affirmed they knew about the Ordinance. There was not a significant difference of awareness between firms interviewed before or after the Ordinance took effect on April 1, 2015 (92.0% v. 92.2%, p=.943). Manufacturing firms were slightly less aware of the ordinance than non-manufacturing employers (84.1% v. 92.7%, p=.042). Other firm characteristics, such as whether they were franchises, family-, woman-, minority- or immigrant-owned, or nonprofits and size were not associated with awareness. Firm size also was not associated with awareness of the Ordinance.

Employers Less Certain About How Ordinance Phases In. A number of employers appeared to have the impression that the Ordinance phased in at a higher minimum wage level more quickly than is actually the case. We asked employers, "Based on your understanding of the Seattle Minimum Wage Ordinance, what is the minimum wage that you have to pay employees working in Seattle as of April 1, 2015?" Across all firms, a majority of employers reported their minimum wage level accurately. Of firms with 500 employees or fewer whose minimum wage level should have been $10.00 or $11.00 per hour on April 1st depending on the wage portion of the "minimum compensation" requirement, 79.3% reported an accurate minimum wage level. For firms with more than 500 employees, for whom $11.00 per hour was the correct wage level, 86.0% reported an accurate minimum wage level. Roughly one-fifth of all firms reported a wage level higher or lower than the Ordinance required, with almost one in ten firms (11.9%) indicating the Ordinance required them to pay a $15 per hour minimum wage as of April 1, 2015.

–  –  –

Initial Employer Responses to the Ordinance. The Survey asked employers about how they were changing employment and business practices in response to the minimum wage requirements.



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