Last year, after vetoing a controversial “living wage” bill while also promising to act on an increase to the city’s overall minimum wage, Mayor Vincent C. Gray commissioned an academic study of the subject, hoping to influence lawmakers as they moved forward with discussion of a wage increase.
In the end, the study would have virtually no impact on the minimum-wage debate: The D.C. Council swiftly passed a bill that will raise the city’s minimum wage to $11.50 an hour by 2016, and despite earlier misgivings, Gray signed it.
The study, however, went on, and the Gray administration’s contractor, the Urban Institute, issued its findings Tuesday. In sum, the study found, the minimum-wage hike will help low-income families — adding a few hundred to a couple of thousand dollars to the incomes of those earning less than twice the poverty line.
But there are some reasons the effects on low-income D.C. residents might not be particularly profound. Half of current low-wage workers in the city don’t actually live in D.C., and higher earnings could lead to offsetting cuts in public benefits for some workers — although most workers will keep more that half of their higher earnings, researchers concluded.
On the flip side, researchers found that a minimum-wage hike, even one as large as the District’s, is unlikely to have any meaningful impact on employment levels in the city. That analysis is rooted not only in national data, but in a review of employment statistics from 1993, when the District hiked its minimum wage before any suburban jurisdictions followed suit.
The study found “little evidence that even a substantial increase in minimum wages in DC would result in lower employment,” with the caveat that “imprecise” estimates could mean “modest negative impacts, of perhaps half-a-percent drop in affected industry employment for each ten percent increase in the minimum wage.”
The big winner from the higher minimum wage, the study shows, could be the District and federal governments. Even marginally higher incomes for low-income working residents will mean fewer residents claiming public benefits such as the federal and D.C. earned income tax credits, Temporary Assistance for Needy Families payments, food stamps and utility subsidies — allowing either a cut in expenditures or the expansion of benefits to new residents. The study does not tackle whether and how marginally shifting the burden of supporting low-income families from the public sector to the private sector might have any effect.
Gray, in a statement, said he is “gratified that the study concluded raising the minimum wage will provide at least a modest benefit to low-income workers and have a negligible impact on employment.” He added that joblessness remains “intolerably high” and the city “must remain committed to growing our economy to create well-paying jobs for District residents and investing in affordable housing so all workers can afford to live in the city.”