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New analysis finds tax on jobs may reduce jobs, disproportionately impact lower-wage earners, and exacerbate the causes of homelessness

SEATTLE – An economic analysis conducted by ECONorthwest finds that a tax on jobs, as proposed by the Seattle City Council, would have negative effects throughout our economic ecosystem – and that lower-wage earners could bear a disproportionate impact of these negative impacts.   

Key findings of the analysis:

An employment tax will increase labor costs for firms, and these costs may be disproportionately borne by low-wage, low-margin jobs. The higher labor costs from the tax will be more evident at the low end of the wage scale, compared to high-wage jobs – making these jobs most likely to be affected as an employer decides whether or where to hire new employees.

Accordingly, a tax on jobs could exacerbate job loss, the largest reported cause of homelessness in King County. The homeless population has a higher risk of unemployment due to lower educational attainment, with 26 percent of respondents having less than a high school diploma, compared to 12 percent for King County residents overall.

Missing out on the creation of the 7,000 jobs that Amazon has put on pause would result in a $3.5 billion loss in regional economic output. The absence of these jobs at Amazon translates to a loss of 14,300 total direct, indirect, and induced jobs and an estimated $1.3 billion loss in regional worker compensation.

Seattle’s largest employers (those with more than 10,000 employees) are responsible for nearly 1/3 of job growth, a larger-than-expected share, considering they account for 25% of the jobs. If these other large firms make a similar set of decisions as Amazon to avoid the costs of the proposed tax, more than 15,000 new jobs could be re-directed to locations outside of Seattle, directly inhibiting local job growth.

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