The Bitter Lesson From Seattle’s Minimum Wage Hike

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The push for a higher minimum wage is a subject that we’ve followed closely at ACC. It is such an obvious example of ridiculous pandering to political constituencies. But that’s run of the mill stuff. What makes “Fight for 15” fascinating to us is that a $15/hour minimum wage would hurt the very people calling for an increase in the minimum wage.

As such we’ve watched this effort with a mix of bemusement and sadness. Bemusement because so many people want to believe that sheer will alone will make a $15 an hour minimum wage work. Forget reality. Give us unicorns! And sadness because we know that people will be hurt by arbitrarily raising the official low end wage bar. Unicorns aren’t real.

Just because a government sets a wage level does not mean that the work someone does is worth that wage level. If one’s work is not worth $15/hour, guess what? You’re not getting any job. Or any legal job anyway. People will of course find a way to make ends meet somehow be it by going on the welfare dole or by finding work in the black market.

This is not complicated. This is basic supply and demand economics. Yet some people just don’t, or perhaps more correctly, refuse to get it.

(From IBD)

In comments that sounded as if they came straight out of an Econ 101 text, the Post concluded that “Increasing the minimum wage increases the costs of hiring workers. As a result, employers must accept reduced margins or customers must pay steeper prices. If employers cannot stay in business while paying their staff more, they will either hire fewer people or give their workers fewer hours. As a result, even if wages per hour increase workers’ total earning could decline.”

Dead on. That’s exactly what happened. And as University of Washington economist Jacob Vigdor, one of the authors of the Seattle study, noted, some businesses simply avoid paying the minimum-wage tax altogether by automating and letting low-end, unskilled workers go — as is now happening in some fast-food chains and at supermarkets.

Click here for the article.