Study: Seattle’s $13 Minimum Wage Led To Drop Of $1,500 In Income For Low-Wage Earners

We’ve said it many times, and some people just refuse to believe it. Which is reasonable I suppose. (Why take our word for it if Huffpost and Slate say we’re wrong?) But if someone’s work is worth $10/hour it won’t suddenly be worth $15/hour just because the minimum wage is $15/hour. The world does not work that way. Many people wish it worked that way – but it doesn’t.

If an apple is red it doesn’t become orange just because the city council declares that the apple is now orange. If I am short I don’t suddenly become tall because the city council passes an ordinance that defines being tall as anyone who has a height of more than 48 inches. Gravity doesn’t stop even if the government says that it should. There is such a thing as REALITY. There are simple economic concepts which over and over are proven right. That a minimum wage that is above the actual wage of “unskilled” workers in an area kills jobs, hours, and all too often businesses, is one of these axioms. 

There are many people who don’t want this to be true. Particularly unions whose contracts are pegged to a level above minimum wage. (This is rarely talked about.) So what if Jose loses his dishwashing job? I just got a raise at my city maintenance job. – And that’s what’s really going on with the “fight for 15” stuff.

Also not talked about is that an overly high minimum wage often chases minorities out of the city and leaves the city for more affluent, more “respectable” people. (But good luck finding anyone who will talk about this reality in “enlightened” Seattle.)

And this speaks to a misunderstanding that all too many people who favor government intervention in the economy have about those who do not. Many economic interventionists think that other people who don’t want an increase in the minimum wage hold this opinion because they are the “capitalists” who just want to keep all the capital for themselves. This idea is as absurd as it is widely held. 

In fact, one of the reasons many of us are against government intervention in the marketplace is because such intervention kills jobs, stifles innovation, makes life harder for those on the economic margins (who then see welfare as an even better option), and makes things more difficult generally for those who see “work” as a way to build a life for themselves and their families.

Many big government people really do think they are the good guys. But let me put it bluntly – often, you are taking money, opportunity, and dignity away from those who have the most tenuous grip on these things.

(From The Daily Wire)

In other words, restaurants didn’t fire anybody, they just put them on part-time shifts and cut back their hours. That shouldn’t be a surprise, since that’s precisely what happens every time the government places an extra burden on employers. One of the great myths of minimum wage movement — and the central planning movement as a whole — is that business owners aren’t operating at a slim margin, but raking in dollars to hide in their Scrooge McDuck moneybins, depleting the potential income of their employees. But that’s not true. Thanks to competition — and competition is fierce in industries that employ minimum wage workers — profit margins are never enormous. Even in 2013, a booming year for the restaurant business, Capital IQ estimated the average profit margin for restaurants at 2.4%. Profitability varies by chain as well, and by local franchise.

Even leftists were taken aback by Seattle’s sizeable minimum wage increase. Jared Bernstein of the Center on Budget and Policy Priorities, a leftist himself, derided the minimum wage increases in Seattle as “beyond moderate” — extreme, in other words. But he admitted, “you [don’t] know what the outcome is going to be. You have to test it, you have to scrutinize it, which is why Seattle is a great test case.”

Or you could leave the market alone, since “testing” markets by cramming down interventionism puts people out of work, at least part-time. Here are the facts: Seattle barely had any jobs under the $11 threshold before the legislation passed. But that wasn’t true of $13 jobs. And the regulations essentially priced a good deal of full-time low-wage labor out of the market. Furthermore, the economy in Seattle right now is strong. What happens during a downturn, when businesses have to shed costs?

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