EspañolSeattle residents learned on May 1 (an international holiday for workers) that the mayor plans to raise the minimum wage to US$15 per hour. If the plan is successful, this would make Seattle’s minimum wage the highest government-mandated rate in all the world’s major cities in terms of purchasing power.
At the moment, Luxembourg has the highest minimum wage in terms of purchasing, at $13.35 an hour. Australia’s rate, however, is higher at $16 an hour (AUS$15.30), based on simple exchange-rate terms.
Despite the suddenness of the announcement, $15 wages will be eased in slowly. By 2017, the increase will affect companies with more than 500 employees, and by 2021, it will include small businesses that offer their employees benefits or tips.
Observers recognize this as a politically and economically significant one. The Republican Party has blocked legislation to increase the federal minimum wage to $10.10, but Barack Obama and the Democratic Party plan to make wage increases part of the platform for fall Congressional elections.
Supporters call increasing the minimum wage an “extremely effective poverty-reduction tool,” but critics worry that hiking the wage will lead to fewer jobs and lower-skilled jobs being replaced with technology.
Tim Fernholz at Quartz hopes that this will present a “useful natural experiment for economists.”